Goldman Sachs upgraded equities to overweight in its global portfolio, citing a 20% year‑to‑date drop in equity multiples and framing the decision as a three‑month tactical call.
Sunil Koul, the bank’s Global Emerging Market Equity Strategist, said the correction has made valuations more attractive while earnings growth remains solid across the US, Europe and emerging markets. He noted that tech demand is still strong, but that semiconductor stocks could lag due to funding concerns.
The upgrade comes as AI‑linked stocks have seen a pullback; investors are wary of the high leverage required for infrastructure build‑out, even though computing capacity demand is steady. Koul added that sentiment in the semiconductor space may take time to recover.
Oil price volatility remains a key risk for India, where the headline index has a historical inverse relationship with AI‑heavy sectors. The bank sees India as a diversification play if global funds shift away from the AI trade, but the outlook is conditional on a decline in crude prices.
Bond yields have risen sharply, exceeding the firm’s fair‑value estimates and making longer‑duration holdings more attractive. Koul said the stronger yields create a better risk‑return balance for investors seeking a hedge during periods of market de‑risking.
Looking ahead, Goldman Sachs expects earnings to stay robust, which should support higher returns over the next 12 months. The bank will reassess its stance after the upcoming earnings season and any shifts in oil prices or AI‑sector funding.