While artificial intelligence and major tech companies have been at the forefront of investor attention, a surprising shift might be on the horizon. Goldman Sachs suggests that the most lucrative opportunities in the coming year could emerge from different sectors altogether.
“At the sector level, we expect the 2026 acceleration in economic growth will boost EPS growth most in cyclical sectors including Industrials, Materials, and Consumer Discretionary,” Goldman’s analysts highlighted in a report released on Thursday. This optimistic forecast also considers a reduction in tariff pressures.
In line with this perspective, analysts predict a significant increase in earnings per share for real estate firms, projecting a jump from 5% this year to 15% next year. Similarly, consumer discretionary sectors are anticipated to see EPS growth from 3% to 7%.
Industrials are set for a notable recovery, with EPS growth expected to rise from 4% to 15%. In contrast, information technology companies are projected to experience a slight moderation in EPS growth, dropping from 26% in 2025 to 24% in 2026.
The market is already beginning to reflect these shifts. In a separate report on Friday, Goldman noted that cyclical stocks have been outperforming defensive stocks for 14 consecutive trading days, marking the longest such streak in over 15 years.
Despite this, Goldman analysts assert that the market’s current performance does not fully capture their optimistic growth outlook. Investor positioning within equities indicates expectations of a growth rate closer to 2%, which is below Goldman’s forecast of 2.5%.
According to the analysts, “Despite the cyclical rebound and widespread economic optimism in our client conversations, the market does not appear to be fully pricing the likely economic acceleration in 2026.”
This anticipated acceleration is pivotal to Goldman’s outlook. The bank’s analysts expect overall US growth to gain momentum next year, contributing to a 12% increase in S&P 500 earnings per share.
These insights from Goldman come amid ongoing debates among investors regarding the potential for a speculative bubble in the stock market, driven by AI enthusiasm.
The S&P 500 index has risen by 16% this year, with the “Magnificent Seven” mega-cap tech stocks now making up roughly one-third of its total weight. Notably, AI chip manufacturer Nvidia, the world’s most valuable publicly traded company, has seen its shares climb 30% this year alone.
Last month, Goldman’s analysts suggested that the market might have already accounted for most potential AI-related gains.
