Goldman Sachs’ wealth management division has released a comprehensive 2026 outlook report challenging popular narratives about the US economy’s dependence on AI spending, arguing that concerns about market fragility and AI-driven bubbles are largely overblown. The Investment Strategy Group, led by Chief Investment Officer Sharmin Mossavar-Rahmani, puts the probability of a US recession at just 25%, down from 35% last year, while projecting a 7% total return for the S&P 500 with 10% earnings growth.
The report directly confronts the widespread belief that AI investment is propping up the entire US economy. According to Goldman’s analysis, all tech-related spending accounted for only 0.5% of the 2.1% GDP growth in 2025, with AI capital expenditures contributing a mere 0.1%. This contradicts assessments from organizations like the OECD, which estimated the US would have been in recession during the first half of last year without AI investments. Mossavar-Rahmani emphasized that the estimate “includes everything related to AI, including data centers” and is “probably a little bit on the high side” because it encompasses power generation and utility infrastructure with benefits beyond AI.
Goldman also challenges the narrative that the Magnificent Seven tech stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) and AI are solely responsible for market performance. While acknowledging these companies’ impressive results, the firm argues that the broader S&P 500 shows respectable earnings growth and returns independent of these tech giants. “It’s just not correct that AI has driven everything in the US, including all earnings and including S&P 500 returns,” Mossavar-Rahmani stated.
However, Goldman does identify “pockets of euphoria” in generative AI companies, warning that some public and private AI firms carry bubble-like valuations characterized by circular financing, easy credit, and questionable economics. The report criticizes AI company founders and CEOs for raising “expectations to an unrealistic level about what AI will deliver in the near future in terms of both revenues for the AI companies and productivity gains for enterprises leveraging AI.”
The firm maintains that US leadership in key innovation areas, including semiconductors, biotechnology, and AI, continues to make America the preeminent investment destination globally, despite political turmoil and tariff uncertainty.
Key Quotes
We wanted to emphasize that in spite of all the headlines that you read about ‘Is America on the decline?’ et cetera, we want to make a very strong stand and say, ‘No, that is not the case’
Sharmin Mossavar-Rahmani, Chief Investment Officer of Goldman Sachs’ Investment Strategy Group, made this statement while presenting the firm’s 2026 outlook, emphasizing US economic strength beyond AI hype.
It’s just not correct that AI has driven everything in the US, including all earnings and including S&P 500 returns
Mossavar-Rahmani directly challenged the popular narrative that AI and the Magnificent Seven tech stocks are solely responsible for market performance, arguing the broader economy shows independent strength.
Some AI company founders and CEOs of the major companies involved with AI have raised expectations to an unrealistic level about what AI will deliver in the near future in terms of both revenues for the AI companies and productivity gains for enterprises leveraging AI
Goldman’s 2026 outlook report warns of bubble-like conditions in certain generative AI companies, criticizing industry leaders for overpromising on near-term AI capabilities and returns.
We do not recommend clients use gold or bitcoin as a hedge in their portfolios
The report explicitly advises against cryptocurrency investments while identifying bitcoin as a bubble, contrasting with the firm’s more optimistic view on AI-driven tech stocks with strong fundamentals.
Our Take
Goldman’s perspective represents a crucial recalibration of AI’s economic narrative at a pivotal moment for the industry. While the firm remains bullish on US tech leadership and AI innovation, its data-driven pushback against AI exceptionalism suggests the market is entering a more mature phase. The distinction Goldman draws between sustainable AI infrastructure investments and speculative generative AI valuations is particularly insightful—it acknowledges AI’s transformative potential while warning against irrational exuberance in certain segments.
This analysis may actually benefit the AI industry long-term by tempering expectations and encouraging more sustainable business models. The criticism of AI executives for overpromising could pressure companies to focus on demonstrable value creation rather than hype cycles. However, Goldman’s relatively small GDP impact estimate for AI spending (0.1%) seems conservative given the scale of data center construction and chip demand, suggesting the firm may be underestimating AI’s infrastructure multiplier effects across the economy.
Why This Matters
This analysis from one of Wall Street’s most influential firms carries significant weight for the AI industry and broader technology sector. Goldman Sachs’ assertion that AI’s economic impact has been exaggerated challenges the prevailing narrative that has driven massive capital flows into AI infrastructure, data centers, and related investments. If institutional investors begin to believe AI spending is less critical to economic growth than previously thought, it could affect funding decisions and valuations across the AI ecosystem.
The warning about “pockets of euphoria” in generative AI companies is particularly noteworthy, as it suggests even bullish financial institutions see signs of overvaluation in certain AI segments. This could signal increased scrutiny of AI startups’ business models and revenue projections, potentially leading to a more disciplined investment environment. The criticism of AI executives for setting unrealistic expectations may also pressure companies to deliver tangible results rather than relying on hype.
For the broader AI industry, this report suggests a maturing market where AI is becoming normalized as one component of economic growth rather than the sole driver, which could actually be healthier for long-term sustainable development of the technology.
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Source: https://www.businessinsider.com/goldman-sachs-bears-are-wrong-us-stocks-will-rise-2026-1