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It is that time of year when the major financial services firm release their predictions and trends to watch for the coming year.

Goldman Sachs, a leading investment bank and asset manager, can boast a pretty good track record with its prediction for 2025. Last year around this time, analysts at Goldman Sachs predicted the S&P 500 would end the year at around 6,500 – which at the time of the prediction would have been about a 9% increase for the year.

Here we are on November 21, and the S&P 500 is at 6,550 – so, a pretty good prognostication with about a month to go in the year. Goldman Sachs also projected an 11% increase in EPS for the S&P 500 and as of right now, analysts target a 10.5% to 12% gain, so, they were on target with that, too.

As for 2026, researchers at Goldman Sachs project the S&P 500 to finish next year at 7,600, which would be about 16% higher than it is right now. They also expect 7% EPS growth. So, we’ll check back in a year and see how they did.

As for trends to watch in 2026, Goldman Sachs researchers recently laid out three things that could drive returns next year.

Goldman Sachs: 3 growth catalysts in 2026

In their 2026 investment outlook, strategists at Goldman Sachs Asset Management outlined three catalysts driving portfolio returns in 2026.

The first catalyst is rate cuts. While the Fed appears iffy on whether or not they will slash rate at its December meeting, there is little doubt that rates will be gradually coming down over the next year or more.

“Easier monetary policy could create opportunities across a range of asset classes. In fixed income, short-dated US Treasuries and investment-grade credit could benefit. Elsewhere, rate-sensitive asset classes—like small-cap stocks and commercial real estate—could get a boost from easing by the US Federal Reserve,” Goldman Sachs analysts wrote.

The second catalyst is AI, or artificial intelligence. Goldman Sachs projects that AI capital expenditures from major US tech companies to remain durable next year. The report points out that Wall Street analysts have consistently underestimated AI capex over the past two years.

“In the public equity market, early enthusiasm for generative AI was concentrated in a narrow group of stocks, but the team sees reasons for the investment landscape to broaden in the future,” the report stated. “A growing trend of large technology companies seeking debt financing for AI capex warrants close monitoring in 2026.”

The third potential driver to watch is M&A. Global deal-making bounced back in 2025 and that should continue in 2026.

“A decline in interest rates may further spur dealmaking, with smaller companies increasingly becoming bid targets as firms seek bolt-on acquisitions or industry consolidation plays,” the report said.

These trends emerge against a backdrop of high stock valuations, new trade dynamics, geopolitical uncertainty, and macroeconomic challenges. For these and other reasons, Goldman Sachs favors active investment, global equity diversification, and a blend of fundamental and quantitative strategies.

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