Goldman Sachs Warns of S&P 500 Underperformance, Highlights Global Equity Shifts
Goldman Sachs strategists, led by Peter Oppenheimer, project a subdued decade ahead for the S&P 500, forecasting annual returns of just 6.5%. This pales against expected gains in Europe (7.1%), Japan (8.2%), and emerging markets (10.9%). The bank attributes the divergence to structural reforms abroad and AI's democratized benefits beyond US tech dominance.
Record-high profit margins and inflated valuations haunt US equities. The S&P 500 trades at 23x forward P/E—a 44% premium to its 20-year average—while global counterparts already outpace its 2024 returns by 11 percentage points. "Tailwinds that propelled US outperformance are fading," the note concludes, as capital rotates toward higher-growth regions.