Goldman Sachs has raised its short-term outlook for global equities, betting that stronger corporate earnings and more attractive valuations could support further gains despite higher energy prices and rising bond yields.
The bank’s strategists upgraded their three-month view on global stocks from neutral to overweight, aligning it with their positive 12-month stance. The shift comes as markets trade near record levels and investors prepare for a closely watched third-quarter earnings season.
Earnings drive optimism
Analysts expect S&P 500 companies to deliver approximately 25% year-on-year earnings growth in the third quarter, according to Bloomberg Intelligence estimates cited in market reporting. Goldman believes companies could exceed that already strong forecast.
Recent increases in oil prices and bond yields have restrained parts of the equity rally. That pause has also made valuations less demanding, giving investors a potentially more attractive entry point if corporate profits continue to expand.
US and Asia preferred
Goldman favours US and Asian equities while maintaining an underweight position in Europe. Its preferred approach combines global technology stocks with selected interest-rate-sensitive, dividend-oriented companies that have fallen out of favour as borrowing costs increased.
The strategy seeks exposure to continued earnings growth while balancing some of the risks associated with expensive technology shares. However, it does not eliminate the possibility of losses if economic conditions deteriorate or market expectations prove too optimistic.
Risks remain
Higher interest rates and energy prices remain key threats to the outlook. More expensive oil can intensify inflation pressures, while rising bond yields make fixed-income investments more competitive with equities and increase financing costs for businesses.
Uncertainty surrounding the US midterm elections could also contribute to market volatility. Meanwhile, Goldman has upgraded its 12-month outlook for government bonds to overweight, suggesting that bonds could regain a role as a portfolio hedge over a longer investment horizon.
For investors, the central question is whether earnings growth can justify elevated stock prices. Strong results could support the rally, but disappointing guidance, persistent inflation or further increases in yields could quickly challenge the bullish outlook.
The takeaway: Goldman is turning more positive on global stocks because earnings remain resilient and valuations have eased. The next earnings reports will help determine whether those fundamentals can sustain the market’s advance.
Sources
- Bloomberg — Goldman Strategists Upgrade Global Stocks on Earnings Boost — Original report, October 12, 2026.
- Reuters — Goldman Upgrades Global Equities on Earnings Optimism — Independent coverage of Goldman’s equity outlook.
- Financial Times — AI Boom Puts US Earnings on Course for Third Quarter of 25% Growth — Earnings expectations and the influence of AI-related investment.
- Goldman Sachs Research — Global Stocks Are Projected to Return 11% in the Next 12 Months — Background on the bank’s broader equity outlook for 2026.
