Goldman Sachs warns market gains may hinge on fewer stocks
Goldman Sachs Asset Management still sees room for gains, but says the upside is increasingly riding on a narrow group of megacap stocks.
Goldman Sachs Asset Management is keeping clients constructive on risk assets while warning that the market is leaning harder on a smaller set of winners. Its July Market Pulse points to resilient growth, continued AI momentum and firm corporate earnings, but that same mix is making concentration risk harder to ignore for anyone pitching portfolios to clients.
The caution is sharpest in the United States. Goldman’s concentration work shows the top 10 stocks in the S&P 500 accounted for 36.5% of the index by market capitalization as of March 2026, a level that leaves broad index exposure more dependent on a handful of names. Concentration in emerging markets is also near a record high, while developed markets excluding the United States peaked in the late 1990s and then generally trended lower.
That leaves client discussions focused on how much of that growth is being carried by megacap technology, AI-linked infrastructure and a few dominant sectors, and what happens if those leaders stall.
Goldman’s international Market Pulse, published on July 8, treats AI as a real capital-spending cycle rather than a speculative side story. AI investments may reach about 1.5% of US GDP in 2026, just below the 1990s tech peak, and the boom differs from dot-com because earnings, profit margins, corporate balance sheets and the current account are in much better shape.
Goldman still expects upside in equities even as breadth narrows. Its 2026 outlook projected the S&P 500 at 7,600 by year-end, a 6% gain from April 24 prices. AI investment could drive roughly 40% of S&P 500 earnings growth this year, while the largest cloud-computing companies were expected to spend an estimated $670 billion in 2026.
Wall Street analysts’ consensus estimate for hyperscaler AI capital spending has risen to $527 billion, up from $465 billion at the start of third-quarter earnings season. AI investment is shifting toward inference and enterprise adoption, not just consumer-facing products, and one company said its top 5% of users were consuming three times as many tokens as the median user.
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