Goldman Sachs Asset Management Releases 2026 Investment Outlook
Investment landscape may be shaped by many factors
New York, NY (November 18, 2025) Goldman Sachs Asset Management released today its Investment Outlook for 2026: “Seeking Catalysts Amid Complexity.” AI-powered innovation continues to underpin investor optimism, while central bank actions, a new trade order, fiscal risks, and geopolitical shifts are creating a complex investment environment. Amid these crosscurrents, the 2026 outlook highlights potential ways for investors to unlock catalysts that may drive investment returns across public and private markets.
The Outlook identifies distinct themes:
Public Markets: Navigating the Nuance: There’s potential for greater equity market dispersion, with a favor toward global equity diversification and a blend of fundamental and quantitative strategies. The focus for fixed income is on diversified duration and strategic curve positioning to navigate mixed macro signals. Income opportunities may come in securitized, high yield and emerging market credit.
Private Markets: Exploring Alternative Dimensions: A more constructive backdrop for new deal and exit activity may lead to greater dispersion of manager returns in private equity. Private credit continues to generate higher yield than public markets, with lower defaults historically than syndicated loans. Rigorous underwriting is key and there’s emerging opportunities in infrastructure driven by AI and energy transition.
“As 2026 unfolds, uncertainty from shifting central-bank policies, geopolitical tensions, and structural change will define the macro backdrop. These forces create opportunities across public and private markets, from dislocations to secular growth themes and alternative sources of return. We believe investors need a truly diversified, multi-asset approach that blends active cross-asset positioning, granular security selection, disciplined risk management, and explicit tail-risk hedging— seeking to protect capital while unlocking new avenues for growth,” said Alexandra Wilson-Elizondo, Global Co-CIO of Multi Asset Solutions at Goldman Sachs Asset Management.
Public markets: Driven by AI, Geopolitics and Monetary Policy
Equity markets
US: As the “Magnificent 7” continue expanding their market share through strong core businesses and strategic reinvestment, the strong earnings power of these companies may set the stage for further gains. The hyperscalers’ AI capex (including Amazon, Google, Meta, Microsoft and Oracle) should remain durable into 2026. However, the trend of the big getting bigger is not entirely uniform, and there are some signs of homogeneity in performance among these large players to date evolving into greater dispersion.
“As fundamental investors, we will monitor the health of companies’ core businesses, particularly as companies aggressively invest in AI technology. Beyond the ‘Mag 7,’ enterprise adoption is broadening. AI applications are expanding fast, especially in areas like automation, customer engagement, and operational intelligence—creating opportunities for platforms that help businesses navigate AI integration,” said Sung Cho, Co-Head of Technology Investing at Goldman Sachs Asset Management.
“Small caps, particularly in defense, tech, consumer sectors, and increasingly healthcare, may be poised for growth. However, higher volatility and liquidity risks necessitate skilled active management to identify high-potential disruptors and navigate challenges pockets of thematic exuberance,” said Greg Tuorto, Portfolio Manager at Goldman Sachs Asset Management.
“This approach helps distinguish quality businesses and avoid pitfalls, with potential to ensure resilient portfolios in a dynamic environment.”
Europe: Look for more capex spending, driven by fiscal flexibility and reindustrialization. European markets have the potential for continued outperformance within defense, energy, and financials sectors and possible improved performance from currently lagging sectors, which will be key for broader market advancement and sustained fund inflows into European equities.
“With expectations for continued economic growth in Continental Europe into 2026, quantitative strategies may help navigate the fragmentation, complexities, and inefficiencies across the European markets. By building diversified portfolios, investors can potentially take advantage of market nuances, generate returns from market inefficiencies and manage risks through a data-driven approach,” said Osman Ali, Global Co-Head of Quantitative Investment Strategies at Goldman Sachs Asset Management.
Japan: Positive tailwinds driven by moderating inflation, stable monetary policy, and potential increased fiscal support from a Takaichi-led government should persist into 2026. Global megatrends, including AI, semiconductor strengths, and geopolitical shifts, also support this market. Although valuations are above historical averages, earnings growth and corporate reforms justify continued optimism. Domestic politics and currency fluctuations will require close monitoring.
Emerging markets: Various macro conditions supported these markets in 2025 including a softening US dollar, declining oil prices, easing inflation, and a dovish Federal Reserve stance, and there’s possible promise for outperformance in 2026. EM equities currently trade at approximately a 40% forward P/E discount to US equities, below the long-term average. This discount is expected to narrow given EM's strong earnings profile.
Fixed Income Markets: Central Bank Divergence Creates Opportunity, But Beware of a Credit Cycle
Investors entering 2026 will need to balance near-term macro signals following pent-up US economic data releases, rising uncertainty regarding the US economy's fiscal health, and growth potential from the AI capex boom. Concerns are growing about a potential turn in the credit cycle with France and Japan’s recent political activity highlighting how quickly expectations can shift. The primary challenge for investors is to interpret these mixed signals, but opportunities may exist for active fixed income investors who manage their allocations.
“We continue to believe that fixed income offers attractive opportunities to investors from a technical and fundamental perspective. However, the balance of risks is shifting and requires an increasingly dynamic approach to portfolio management, combining diverse portfolio construction with robust risk management. With diverging global inflation and growth dynamics, flexibility will be critical to adapt to evolving conditions,” said Kay Haigh, Co-CIO of Fixed Income at Goldman Sachs Asset Management.
Central bank divergence: Given labor market weakness, Goldman Sachs Asset Management sees potential for two Fed cuts in 2026. The ECB may hold for the foreseeable future while the BoE could resume cuts in December, driven by improved inflation, a relatively weak labor market, and potential tax hikes. Japan, with its high inflation and robust growth, will likely prompt the BoJ to hike rates. This outlook is reinforced by recent political changes and a shift towards looser fiscal policy.
Carry opportunity: Investors may find opportunities to secure relatively high-income streams across various asset classes such as the securitized space, including AAA-rated tranches of collateralized loan obligations (CLOs) and valuations among the BBB-rated cohorts. Another 2026 income avenue could be high-yield credit. With favorable market dynamics, including firm investor demand and easing financial conditions, this should continue to support primary market activity.
Potential for a credit cycle: Investors should monitor signs of late-cycle behaviors alongside the potential for deregulation or reduced policy uncertainty, and if it begins to pressure leverage ratios, it could potentially result in credit rating downgrades.
“Continued AI adoption and a relatively stable market should provide a solid platform for growth. However, a marked reversal and broad unwind of AI-related investments or significant labor market weakness could be the precursor to a hard landing for the global economy. Getting this call right will be a key factor for investors in 2026,” continued Haigh.
Private Markets: Navigating the Complexities
Private equity: As deal activity rises in private markets, it will provide Limited Partners (LPs) with new data to evaluate manager track records as they allocate new capital to existing and potential new relationships. General Partners (GPs) will need to strategically identify growth areas that exceed overall economic growth, potentially shifting in geographic focus. The pursuit of higher-growth sectors is expected to continue. As data science, AI, and automation continue to mature and accelerate, there is greater potential for driving revenue growth and enhancing efficiency.
“Dealmaking activity is accelerating, with strong capital markets and lower financing costs as strong tailwinds,” said Michael Bruun, global co-Head of Private Equity at Goldman Sachs Asset Management. “With valuations still high, the importance of value creation and operational resilience is paramount, with the strongest companies now able to attract interest from strategic buyers and public market investors.”
“Going into 2026, we expect to see continued LP interest in secondary investments at attractive entry points, providing a shorter duration than their primary private equity investments. Secondary funds and continuation vehicles will continue to be critical sources of liquidity to GPs and LPs as the market works through a backlog of exits,” said Harold Hope, Global Head of Vintage Strategies at Goldman Sachs Asset Management.
Venture capital and growth equity ecosystem: There’s potential opportunities for investors with dry powder to provide capital to category-leading companies that may previously have been out of reach due to elevated valuations at prior rounds. The long-term trend of companies wishing to stay private for longer continues and company sizes and the capital amounts they seek suggest growing demand for growth equity-scale, rather than venture-scale, funding rounds.
Private credit: A more favorable M&A environment should stimulate greater demand for credit financing; however, as long as the supply of credit remains robust, spreads are expected to stay range bound. A more robust M&A environment should also drive increased demand for mezzanine solutions. Private credit continues to present attractive value as it still generates higher yields than public markets, with historically lower default rates compared to syndicated loans.
“As deal activity accelerates and interest in investment grade private credit grows, particularly asset-backed lending, private credit will be an important source of financing. Risk adjusted returns are important. In the event of an eventual credit cycle, strong origination pipelines, experience through credit cycles and scaled platforms should differentiate GP performance,” said James Reynolds, Global Co-Head of Private Credit at Goldman Sachs Asset Management.
Real estate: A possible rebound may occur amid expectations for additional rate cuts in many markets. After transaction activity picked up in 2025, fueled by liquid financing markets and the need to generate distributions, we believe transaction activity is primed to accelerate in 2026. Dry powder is at its lowest point since 2020, presenting potential opportunities for investors willing to commit to the asset class, bit there will likely be wide dispersion across and within sectors, regions, and strategies.
“Valuations and transaction volumes have stabilized, and we believe sentiment will continue to improve heading into 2026,” said Jim Garman, Global Head of Real Estate at Goldman Sachs Asset Management. “With a lower cost of capital, real estate looks compelling, but sector and property selection are crucial.”
Infrastructure: Digitization remains a central theme across infrastructure, but opportunities exist in a variety of themes. The circular economy, for instance, encompasses waste, water, and recycling, and involves contracted, essential services largely insulated from macroeconomic fluctuations.
“In 2026, we expect to see AI and digitization, energy generation and transmission, changing global trade patterns, and upgrades to aging infrastructure drive broad and exciting opportunities,” said Tavis Cannell, Global Head of Infrastructure at Goldman Sachs Alternatives. “We believe investors can access the next wave of growth, particularly through mid-market opportunities where active ownership and value creation can unlock meaningful upside.”
About Goldman Sachs Asset Management
Goldman Sachs Asset Management is the primary investing area within Goldman Sachs, delivering investment and advisory services across public and private markets for the world’s leading institutions, financial advisors, and individuals. The business is driven by a focus on partnership and shared success with its clients, seeking to deliver long-term investment performance drawing on its global network and deep expertise across industries and markets. Goldman Sachs Asset Management is a leading investor across fixed income, liquidity, equity, alternatives, and multi-asset solutions. Goldman Sachs oversees approximately $3.5 trillion in assets under supervision as of September 30, 2025. Follow us on LinkedIn.