Goldman Sachs Strategist Ben Snider on 2026 Equity Outlook, Tech Spending, and Economic Growth

2026 Equity Outlook and Earnings Growth

• 💡 Goldman Sachs anticipates a good year ahead for the S&P 500, projecting 12% earnings growth and a 12% market return.
• 🎯 This growth is expected to be driven by sectors that have performed well previously, with tech spending and earnings continuing to be significant contributors.
• 🚀 A key change anticipated for the year is a broadening of market participation, with a recommendation for small caps and stocks exposed to the consumer.

Economic Acceleration and Market Strategy

• 📈 The firm expects economic acceleration in the first half of the year, with GDP growth projected to be north of 3%.
• 📊 In a procyclical environment, an equal-weight S&P is favored over a cap-weighted one for the first half of the year.
• 📉 While expecting continued economic acceleration, the outlook suggests that as this peaks in the second half, inflation will continue to decline, allowing market confidence to regain.

Risks and Valuations

• ⚠️ The biggest risk to the equity forecast is a downturn in economic growth, specifically monitoring jobless claims for signs of labor market weakening.
• 📈 A slight tick down in the unemployment rate to 4.5% is expected and considered positive for stocks.
• 💰 The most significant pushback received concerns already high valuations, with the current PE multiple around 22 times, near historical highs.

Capital Expenditures and Tech Spending

• 💰 Goldman Sachs is constructive on hyperscalers' ability to continue their capital expenditures (CapEx) relative to cash flow.
• 📊 CapEx growth is expected to continue this year, with consensus estimates around $530-540 billion, a 40% increase from the previous year.
• 📈 The strength of cash flows and balance sheets suggests that risks to the CapEx spending estimates are skewed to the upside.