Catenaa, Wednesday, November 12, 2025- Goldman Sachs expects US equities to keep lagging for the next decade, with annual returns of 6.5%, the weakest among all regions.
Peter Oppenheimer and his team recommended that investors increase diversification beyond the US as elevated stock valuations put a lid on gains.
They expect the S&P 500 to deliver annual returns of 6.5% over the next 10 years. Emerging markets are projected to be the strongest, with growth of 10.9% a year.
After a decade of constantly superior performance, driven by a surge in technology stocks and the craze for artificial intelligence, the S&P 500 has lagged behind global peers significantly this year.
The benchmark has climbed 16%, compared with the 27% rally in a worldwide MSCI Inc. index that excludes the US.
“Diversify beyond the US, with a tilt toward emerging markets,” Oppenheimer and his team wrote in a note. “We expect higher nominal GDP growth and structural reforms to favor EM, while AI’s long-term benefits should be broad-based rather than confined to US technology.”
In the coming years, the strategists expect emerging-market gains to be driven by strong earnings growth in China and India. Asia excluding Japan is seen as the second-best performer with a 10.3% annual return.
Japan is set to achieve 8.2%, underpinned by earnings growth and policy-led improvements in investor payouts. Europe is expected to hand investors a 7.1% annual return.
The US index now trades at a premium of more than 50% to global peers. The drivers that pushed S&P 500 prices and earnings higher in the past decade, such as rising margins, lower taxes, and low interest rates, are unlikely to be as strong in the coming 10 years, the Goldman team said.
