Goldman strategists expect US stocks to underperform for next decade
Goldman Sachs strategist Peter Oppenheimer, who accurately forecast Wall Street’s underperformance this year, expects US equities to continue lagging for the next decade.
His team recommends investors diversify beyond the US, citing elevated stock valuations that could limit gains, News.Az reports, citing Bloomberg.
Oppenheimer projects the S&P 500 will deliver annual returns of 6.5% over the next 10 years—the weakest among global regions—while emerging markets could see the strongest growth at 10.9% per year.
After a decade of outperformance fueled by technology stocks and artificial intelligence enthusiasm, the S&P 500 has underperformed global peers this year, rising 16% compared with a 27% gain in the MSCI global index excluding the US.
“Diversify beyond the US, with a tilt toward emerging markets,” Oppenheimer and his team wrote in a note. “We expect higher nominal GDP growth and structural reforms to favor EM, while AI’s long-term benefits should be broad-based rather than confined to US technology.”
In the coming years, the strategists expect emerging-market gains to be driven by strong earnings growth in China and India. Asia excluding-Japan is seen as the second-best performer with a 10.3% annual return. Japan is set to achieve 8.2%, underpinned by earnings growth and policy-led improvements in investor payouts. Europe is expected to hand investors a 7.1% annual return.
Oppenheimer, Goldman’s chief global equity strategist, early last year warned that US stocks were starting to look too expensive and began advocating for a shift into long-lagging international markets.
The S&P 500 is trailing most regions in dollar terms in 2025, with earnings growth expected to converge globally next year, leaving the benchmark looking less attractive. Its forward price-to-earnings ratio has surged to 23, equivalent to the post-pandemic peak and within reach of the record hit prior to the dot-com bubble.
The US index now trades at a premium of more than 50% to global peers. The drivers that pushed S&P 500 prices and earnings higher in the past decade, such as rising margins, lower taxes and low interest rates, are unlikely to be as strong in the coming 10 years, the Goldman team said.
“The S&P 500 net profit margin and ROE currently stand near record highs, and many of the tailwinds to corporate profitability in recent decades are unlikely to boost profits to a similar extent going forward,” the strategists said.
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