Goldman Sachs has outlined five critical investment themes for 2026, covering the turning point in the AI investment cycle, the impact of Federal Reserve leadership changes on the dollar, the strategic revaluation of commodities, the necessity of portfolio diversification, and structural shifts in European markets.
As U.S. benchmark indices return to highs this week and markets digest this year's major risks, Goldman Sachs' top trader Mark Wilson highlighted these five key themes for 2026.
Goldman Sachs views the potential transition in Federal Reserve leadership next year as a critical turning point. Market expectations lean toward Kevin Hassett taking the helm, which could lead to the Fed allowing the economy to "run hot," prioritizing nominal growth over inflation concerns and potentially triggering sustained dollar weakness. Goldman's forex team already predicts a significant dollar depreciation in 2026.
In AI investments, Goldman Sachs believes the market is at the "end of the prologue." The era where AI value creation was attributed primarily to large language models and all AI-related assets surged indiscriminately may be over. The winners are diverging—companies providing AI infrastructure (compute hardware, data centers, power supply) and those successfully deploying AI to demonstrate productivity gains will remain attractive.
Regarding asset allocation, given U.S. equities' historically high valuations relative to global markets, extreme index concentration, and potential structural dollar weakness, Goldman emphasizes the importance of diversification.
**Trade Theme 1: AI Story at the "End of the Prologue"** Goldman Sachs compares the current AI investment cycle to a modern "space race." The U.S. "Genesis Plan," signed by President Trump in late November, pools national resources to accelerate AI research. The bank notes that companies investing heavily to "win" this race may face prolonged uncertainty in returns. In contrast, firms supporting AI infrastructure—compute hardware, data centers, power suppliers, and those successfully integrating AI to boost productivity—remain compelling. Wilson argues that the market is now at the "end of the beginning" for AI, where indiscriminate bullishness on AI-linked assets fades, and scrutiny over true beneficiaries intensifies. He expects current AI investments to yield unexpected breakthroughs (e.g., space-based data centers) and sees this as an optimal time for long-term "innovation" bets.
**Trade Theme 2: Fed Chair Transition as a Dollar Weakness Catalyst** Goldman notes that the next Fed chair appointment—likely Kevin Hassett—could signal a shift toward tolerating economic overheating, sidelining inflation concerns and weakening the dollar. The bank’s forex team forecasts significant dollar depreciation in 2026, with the DXY already showing weakness, breaking below 50- and 200-day moving averages to near three-month lows. Wilson observes that even strong currencies like the Swiss franc have lost over 80% of their gold-based purchasing power in two decades. With the Fed expected to cut rates three times in the next six months and twice more in early 2026, dollar strength may fade, potentially benefiting equities.
**Trade Theme 3: Copper as the New Gold?** Wilson highlights the case for "hard assets," particularly copper, amid dollar weakness and tightening supply-demand dynamics. Copper’s recent record highs reflect fundamental drivers: Goldman projects over 60% of demand growth by 2030 will come from grid and power infrastructure—equivalent to adding another U.S.-sized demand. Despite valuation challenges for miners, supply constraints underpin prices. The market underestimates copper’s strategic premium and new demand drivers, making it highly attractive amid ongoing M&A.
**Trade Theme 4: Diversification as a Necessity** With U.S. equities at 25-year highs relative to global peers and extreme concentration, sustained outperformance grows harder. Wilson calls diversification the "price" investors must pay to stay invested and maintain equity overweight. The strategy proved effective in 2025: non-U.S. markets (e.g., UK, France) outperformed the Nasdaq in dollar terms. Eurozone capital is rotating out of U.S. stocks, while EM allocations rebound from decades-low levels.
**Trade Theme 5: Global Inflection and European Opportunities** The World Economic Forum dubbed 2025 a "global inflection" year. Goldman notes that Europe, despite its "anti-business" reputation, holds undervalued strengths in manufacturing, tech, and energy, backed by top-tier research and cultural institutions. Wilson argues European equities reflect corporate resilience, not political risks. As Europe addresses underinvestment and punitive regulation, valuations make the region key for diversification.
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