Goldman Sachs: Tech stock valuations are under pressure; the biggest opportunity in the stock market in 2026 is not in AI.

PANews reported on December 15th that a recent Goldman Sachs report points out that while investors are currently focused on artificial intelligence and mega-cap tech giants, an accelerated economy in 2026 could bring greater opportunities to cyclical sectors such as industrials, materials, and consumer discretionary. Analysts predict a significant increase in earnings per share (EPS) growth for these sectors, with industrial EPS growth potentially jumping from 4% to 15%, real estate EPS growth rising from 5% to 15%, and consumer discretionary EPS growth expected to increase from 3% to 7%.

In contrast, EPS growth for information technology companies may slow from 26% in 2025 to 24% in 2026. Goldman Sachs believes that despite the recent strong performance of cyclical stocks, which have outperformed defensive stocks for 14 consecutive trading days, the market has not yet fully reflected the potential for economic acceleration in 2026.

Goldman Sachs predicts that overall U.S. economic growth will accelerate in 2026, driving S&P 500 EPS growth by 12%. Analysts emphasize that despite the ongoing AI hype, the market may have already priced in most of the potential benefits of AI.