Goldman Sachs recently released its 2026 outlook report for the US automotive and industrial technology sectors, highlighting strong performance in 2025, with both industrial tech and auto stocks outperforming the S&P 500. Looking ahead to 2026, the firm expects industrial tech stocks to continue leading the market, driven by cyclical recovery and long-term growth opportunities in data centers/artificial intelligence (AI), energy infrastructure, and robotics automation. Meanwhile, for the auto sector, given that industry sales have normalized historically with limited growth prospects, investors should adopt a selective approach, focusing on stocks with company-specific catalysts.
**2025 Performance: Strong but Volatile** Year-to-date in 2025, Goldman Sachs-covered automotive original equipment manufacturers (OEMs) and Tier 1 suppliers have seen a median stock price increase of 23%, while industrial tech stocks surged 63%, compared to the S&P 500's 16% gain. This outperformance reflects both end-demand trends and valuation multiple expansion. However, the sectors exhibited significant volatility. Auto stocks plunged in spring due to tariff policy shocks but later rebounded as tariff levels eased, while data center-related stocks fluctuated amid changing expectations for hyperscale capital expenditures.
**2026 Outlook: Industrial Tech to Lead, Auto Stocks Require Selectivity** Goldman Sachs expects interest rate cuts to support valuations in 2026, but their actual impact on stock performance will depend on the macroeconomic backdrop. Historical data suggests that if rate cuts are not recession-driven—similar to the 1995–1997 period—covered stocks tend to perform well. The firm’s economics team projects limited US recession risks, with real GDP growth of 2–2.5% in 2026.
For industrial tech, cyclical recovery post-inventory destocking and structural growth in data centers/AI, energy infrastructure, and robotics automation are key drivers. Goldman Sachs has significantly raised its capital expenditure estimates for major hyperscalers, forecasting growth of 79% in 2025 and 36% in 2026. Defensive names like Keysight Technologies (KEYS.US), Amphenol (APH.US), and TE Connectivity (TEL.US)—all rated "Buy"—could outperform in tighter market conditions.
In contrast, the auto sector faces muted growth, with global production at historical norms and low single-digit sales growth expected in 2025–2026. Goldman favors selective picks such as General Motors (GM.US), BorgWarner (BWA.US), and Visteon (VC.US). While lower rates may benefit pricing structures over volume growth, exposure to Chinese automakers’ global expansion could be a competitive edge for suppliers.
**Key Themes and Trends** Goldman highlights data centers and physical AI as critical themes. Data center and AI infrastructure demand remains robust in 2025, with focus shifting to profitability amid evolving capex trends and tech transitions (e.g., Rubin, Rubin Ultra, and ASIC chips). In electronic manufacturing services (EMS) and power/cooling, firms like Flex (FLEX.US), Jabil (JBL.US), and Vertiv (VRT.US) are poised for margin expansion, while component suppliers like Amphenol and TE Connectivity benefit from rising per-device content.
Autonomous driving commercialization is accelerating, with focus now on scalability and profitability. By end-2026, leading players’ operational cities are projected to expand from 3 (US-only in early 2025) to ~20 globally, impacting profits for autonomous service providers, automakers, and suppliers. Tesla (TSLA.US) holds cost advantages in robotaxis, but software adaptability and mileage will dictate earnings. Its physical AI bets, particularly humanoid robots (Optimus), target mass production by 2026 (Gen 3) and 10 billion annual units long-term, though scaling may take years.
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