Goldman Sachs has just thrown a bucket of cold water on the long-held belief that U.S. stocks are the safest and strongest bet for the next decade, warning that American equities could trail the rest of the world for years. Yet the same research also argues that the U.S. economy itself is set to outperform expectations, and that investors who adapt rather than retreat could still come out ahead. The message is not to abandon the market, but to rethink where the best risk‑adjusted returns are likely to come from.
That combination of caution and optimism is the real story: a powerful Wall Street institution telling U.S. investors to brace for thinner stock gains at home while pointing to new opportunities abroad and in overlooked corners of the domestic market. I see it as a pivot away from a decade defined by U.S. mega-cap dominance toward a more balanced, globally diversified playbook that still assumes growth, just not in the same places or at the same pace.
The core warning: a decade of U.S. underperformance
The blunt headline from Goldman Sachs is that U.S. stocks, and particularly the large-cap names that dominate the S&P 500, are expected to lag global peers over the coming ten years. The firm projects that the American market could be the weakest performer among major regions, a striking reversal after a long stretch in which U.S. indices trounced international benchmarks. That call is rooted in a view that the easy gains from multiple expansion and tech-led enthusiasm have largely been harvested, leaving less room for outperformance relative to cheaper markets overseas.
In its long-horizon outlook, Goldman Sachs frames this as a structural shift rather than a short-term wobble, suggesting that investors should prepare for a full decade in which U.S. returns trail those from other regions. One analysis of the bank’s projections describes the domestic market as potentially the “world’s worst performer over the next decade,” citing factors such as Lackluster Earnings Growth Corporate profitability and already elevated valuations. For U.S. investors who have grown used to domestic dominance, that is the “bad news” at the heart of the new forecast.
Why Goldman thinks the U.S. will lag: valuations and earnings
Goldman Sachs is not simply making a call based on vibes or market fatigue; its caution on U.S. stocks is grounded in hard numbers on earnings and valuations. Corporate profits in the United States are already high relative to history, which limits how much further margins can expand without a major productivity shock. At the same time, price-to-earnings multiples on leading U.S. indices remain rich compared with many international markets, especially when adjusted for sector mix and growth expectations. When starting valuations are this stretched, future returns tend to be more modest.
One detailed breakdown of the firm’s thinking notes that U.S. large caps are facing exactly this problem of strong current profitability paired with limited room for further upside, a dynamic that feeds into the projection that American stocks could underperform for ten years. The analysis highlights how Goldman Sachs Says US Stocks Could Lag for a long stretch, and it ties that view to the idea that investors have already paid up for the growth story embedded in the S&P 500. When earnings growth slows from a high base and multiples compress even slightly, the math on total returns becomes far less exciting than what U.S. investors have enjoyed over the past decade.
The global pecking order: U.S. in last place, emerging markets on top
Goldman’s forecast does not exist in a vacuum; it is part of a broader global ranking that puts the United States at the bottom of the performance table. In that pecking order, emerging markets and select international developed markets are expected to deliver stronger returns, helped by lower starting valuations, improving earnings trajectories, and in some cases demographic tailwinds. The implication is that the next decade’s winners are more likely to be found in places that have spent the last cycle lagging behind U.S. benchmarks.
One report summarizing the bank’s global view notes that Goldman Sachs forecasts the US stock market to be the global laggard in the next decade, while highlighting the potential for better risk‑reward in emerging markets and non‑U.S. developed equities. The same analysis points to “Bloat” in U.S. mega caps as a key reason for the downgrade, arguing that the concentration of returns in a handful of technology and communication services giants has left the broader market vulnerable. For investors willing to look beyond home-country bias, that global reshuffle is less a threat and more an invitation.
The dollar premium and why it matters for returns
Another pillar of Goldman’s caution is the role of the U.S. dollar, which has enjoyed a sizable premium as global investors flocked to American assets for safety and yield. That strength has been a tailwind for U.S. buyers of foreign goods and a headwind for overseas earnings translated back into dollars, but it has also inflated the relative value of U.S. stocks compared with international peers. If that currency premium begins to unwind, it could simultaneously boost returns in foreign markets and weigh on dollar‑denominated assets.
One detailed explanation of this mechanism notes that as the dollar premium unwinds and reinflates other countries’ currencies, it could add roughly 2 percentage points of annual return to non‑U.S. markets while subtracting a similar amount from American equities. The same analysis underscores that as this premium unwinds and reinflates other countries’ currencies, the relative performance gap could widen even if corporate fundamentals remain solid in the United States. For investors, currency is not just a footnote; it is a powerful driver of long‑term total returns that can tilt the playing field away from the home market.
Subpar, not catastrophic: what “lower returns” really means
It is important to stress that Goldman’s message is not that U.S. stocks are headed for collapse, but that the era of outsized gains is likely behind us for a while. The firm is effectively telling investors to expect “subpar” returns from American equities compared with their own history and with other regions, not negative returns in absolute terms. That nuance matters, because it shifts the conversation from fear of a crash to a more sober discussion about opportunity cost and portfolio construction.
One widely circulated summary of the forecast captures this tone by stating that the stock market is likely to dish out weaker gains for the foreseeable future, while also emphasizing that the stock market’s going to be dishing out subpar gains rather than outright losses. Another analysis aimed at retail investors notes that Goldman is not telling people to flee equities, but to recalibrate expectations and consider diversifying beyond the current market darlings. In other words, the “bad news” is about relative performance and muted upside, not a prediction of imminent disaster.
The surprising bright spot: a stronger‑than‑expected U.S. economy
Here is where the story gets more nuanced: even as Goldman Sachs warns that U.S. stocks may underperform, it is relatively upbeat about the underlying American economy. The firm argues that growth in the United States is poised to beat consensus expectations, helped by resilient consumer spending, ongoing investment in technology and infrastructure, and a labor market that, while cooling, remains fundamentally healthy. That macro backdrop is not what you would expect if the bank were forecasting a deep downturn or systemic crisis.
In a recent economic outlook, Goldman Sachs makes the case that the U.S. economy is positioned to surprise on the upside in 2025, with solid real growth and contained inflation. The analysis describes how the US economy is poised to beat expectations in 2025, even as financial markets adjust to a world of higher-for-longer interest rates and more modest equity returns. For investors, that split view means the problem is not economic collapse, but the price already embedded in U.S. assets relative to that reasonably healthy outlook.
Goldman’s long‑term stock roadmap through 2035
To understand how this all fits together, it helps to look at Goldman’s longer‑term roadmap for equities, which stretches out to 2035. The firm has laid out a detailed forecast for stock market returns over the next decade and beyond, incorporating assumptions about earnings growth, interest rates, inflation, and valuation normalization. The overarching message is that global equities can still deliver positive real returns, but the distribution of those gains will be more balanced and less U.S.‑centric than in the past.
One breakdown of this roadmap notes that Goldman Sachs unveils stock market forecast through 2035 with a view that is “mostly simple”: lower but still positive returns, a rotation toward value and income, and a greater role for international diversification. The same analysis emphasizes that the bank has quietly dropped a rare, previously more bullish forecast, replacing it with a more tempered outlook that aligns with its warnings about U.S. underperformance. For long‑term investors, the key takeaway is not to abandon equities, but to recognize that the easy money phase is over and that strategy will matter more than ever.
Where Goldman still sees opportunity: sectors, dividends, and AI
Despite the caution on headline indices, Goldman Sachs is not telling investors to sit in cash. Instead, it is pointing to specific pockets of opportunity, both in the United States and abroad, that could outperform even in a world of lower overall returns. Value stocks, dividend payers, and companies tied to structural themes like artificial intelligence and energy transition feature prominently in that opportunity set. The idea is to lean into quality and cash flow rather than chasing the most crowded growth stories.
One investor‑focused analysis of the bank’s outlook highlights “5 Strong Buy Value Dividend Ideas” that could benefit from this environment, noting that Strong Buy Value Dividend Ideas are central to Goldman’s strategy for navigating a decade of potential U.S. underperformance. Another piece aimed at retail investors underscores that Goldman is not discouraging people from staying in the market, but is instead steering them toward sectors and companies with durable earnings and reliable payouts, even as it warns that Goldman isn’t exactly discouraging investors from getting into and remaining in the stock market. In that framing, the “caveat” to the bad news is that there are still plenty of ways to make money, just not by blindly riding the same U.S. mega‑cap wave.
The AI and dollar wild cards: how the next decade could surprise
Goldman’s strategists also flag a couple of wild cards that could meaningfully alter the trajectory of returns, for better or worse. One is the impact of artificial intelligence, which could drive a new wave of productivity gains and profit growth across sectors, not just in the obvious names like Nvidia or cloud hyperscalers. If AI adoption spreads through industries from manufacturing to healthcare, the earnings picture could look very different from the baseline forecasts that underpin today’s cautious return assumptions.
In a recent discussion of where to invest for the next ten years, the firm’s analysts argue that the benefits of AI will be felt by companies all over the world, not just in Silicon Valley, and that the second major wild card is the path of the dollar. They note that they think the benefits will be felt by companies all over the world. the second wild card is the dollar, which loops back to the earlier point about currency premiums and global diversification. If AI delivers more than expected or the dollar weakens more sharply than forecast, the balance of winners and losers across regions and sectors could shift in ways that today’s models only partially capture.
What individual investors should actually do now
For everyday investors, the practical question is how to respond to a forecast that sounds gloomy for U.S. stocks but still assumes growth and opportunity. The first step is to recognize that a decade of relative underperformance is not the same as a lost decade in absolute terms; U.S. equities can still deliver positive returns, just not necessarily the best ones available. That makes diversification across regions, sectors, and styles more important than it has been in years, especially for portfolios that have become heavily concentrated in a handful of U.S. technology names.
One investor‑oriented breakdown of Goldman’s message puts it bluntly: people “had to know this day of reckoning was coming sooner or later,” given how far and how fast U.S. mega caps have run, but the solution is not panic selling. Instead, it suggests that Investors had to know this day of reckoning was coming sooner or later and should now look more seriously at international stocks and U.S. names outside the market’s present darlings. Another summary aimed at retail readers echoes that theme, noting that Goldman is effectively telling people to stay invested but to be more selective and globally minded. In practice, that could mean adding exposure to emerging markets through low‑cost ETFs, tilting toward dividend‑rich sectors like utilities and consumer staples, and trimming oversized positions in the most crowded U.S. growth stocks.
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Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
