In a significant strategic shift for global investors, Goldman Sachs Research has issued a compelling prediction: US stocks are poised to underperform international markets over the next decade. The venerable financial institution, through its Chief Global Equity Strategist Peter Oppenheimer, advises investors to fundamentally rethink their portfolio allocations, advocating for a robust diversification into regions beyond the United States. This outlook, articulated in mid-November 2025, suggests a profound rebalancing of global investment strategies, moving away from the US-centric approach that has dominated recent years.

The immediate implication of this forecast is a call to action for asset managers and individual investors alike. For years, US equities, particularly the S&P 500, have delivered exceptional returns, leading many to concentrate their holdings stateside. Goldman Sachs' latest analysis challenges this paradigm, suggesting that the tailwinds that propelled US stocks to outperform are dissipating, while new opportunities are emerging in international and developing economies. This shift could trigger a substantial reallocation of capital globally, impacting everything from institutional mandates to retail investment choices.

Goldman Sachs Sounds Alarm on US Valuations, Touts Emerging Market Potential

Goldman Sachs' (NYSE: GS) detailed analysis, published between November 12 and November 18, 2025, projects that the S&P 500 will deliver an annualized return of merely 6.5% over the next ten years, making it the weakest performer among major global regions. This stark forecast is rooted in a multi-faceted rationale, primarily highlighting the elevated valuations of US stocks. According to Oppenheimer, US equities currently trade at a valuation more than 50% higher than their global peers, a premium deemed unsustainable for future growth.

The firm points to the fading impact of past drivers that fueled US stock outperformance. Factors such as rising profit margins, lower corporate taxes, and a prolonged period of low interest rates are unlikely to provide the same impetus in the coming decade. S&P 500 net margins and return on equity are already near historical highs, suggesting limited room for further expansion. Concurrently, Goldman Sachs anticipates stronger nominal GDP growth and the positive effects of structural reforms in emerging markets, particularly China and India, to drive superior earnings growth and, consequently, higher returns.

Moreover, the widespread belief that artificial intelligence will primarily benefit US technology giants is challenged. Goldman Sachs posits that the long-term advantages of AI will be broad-based, permeating various sectors and geographies globally, rather than remaining concentrated within a select few US tech companies. Adding another layer to their argument, the firm foresees a potential decline in the US dollar, which historically has coincided with stronger performance in international markets, as dollar weakness enhances dollar-translated returns for globally diversified portfolios. Goldman Sachs' projected annualized returns for other regions underscore this outlook: Emerging Markets are expected to yield 10.9%, Asia ex-Japan 10.3%, Japan (TYO: 7203) 8.2%, and Europe 7.1%.

Companies Brace for a Global Rebalancing Act

The reorientation of investment flows predicted by Goldman Sachs will inevitably create a distinct set of winners and losers across the corporate landscape. US-centric companies, particularly those within the S&P 500 (NYSEARCA: SPY) that have benefited from high valuations and domestic investor preference, may find their growth narratives challenged. Technology giants like Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN), which have largely driven the S&P 500's performance in recent years, could face headwinds if capital rotates away from highly valued US growth stocks. Their sheer size and global reach, however, might offer some resilience, but their stock performance could be moderated by a broader shift in investor sentiment.

Conversely, companies with significant exposure to emerging markets and European economies are poised to benefit. Multinationals with robust operations in Asia, Latin America, and Africa, such as consumer goods conglomerates like Unilever (NYSE: UL) or luxury brands with strong European and Asian demand, could see increased investor interest. Local champions in these regions, from industrial firms in Germany to technology innovators in India (NSE: NIFTY50), are also likely candidates for capital inflows. For instance, companies listed on the Shanghai Stock Exchange (SSE: 000001) or the Bombay Stock Exchange (BSE: SENSEX) might experience a boost as investors seek higher growth potential outside the US.

The shift also implies a potential boost for commodity-producing nations and companies, as emerging markets often have higher raw material demands. Mining companies like Rio Tinto (ASX: RIO) or BHP Group (ASX: BHP), or energy firms with significant non-US operations, could indirectly benefit from increased economic activity and investment in developing regions. Furthermore, financial institutions specializing in international trade and cross-border investments may see an uptick in activity as investors reallocate capital globally. This strategic pivot by Goldman Sachs could fundamentally alter how fund managers construct their portfolios, leading to a scramble to identify undervalued opportunities in previously overlooked markets.

A Broader Industry Trend Towards Global Diversification

Goldman Sachs' forecast is not an isolated event but rather fits into a broader industry trend emphasizing global diversification and a re-evaluation of market leadership. For much of the past decade, the narrative has been dominated by the exceptional performance of US technology and growth stocks, leading to a concentration of capital and attention. However, as global economic growth becomes more distributed and valuations in the US reach historical highs, a growing chorus of strategists and economists has begun to highlight the potential for stronger returns in international markets. This includes other major investment banks and research houses which have also started to point towards the relative value in European, Japanese, and Emerging Market equities.

The potential ripple effects of such a significant prediction from a firm like Goldman Sachs are substantial. Competitors in the asset management space may feel pressure to adjust their own outlooks and product offerings to align with this new narrative, potentially leading to an increase in globally diversified funds and ETFs. This could also influence corporate strategies, with US companies potentially looking to expand their international footprint more aggressively, and non-US companies finding it easier to attract foreign direct investment. Regulatory bodies might also pay closer attention to capital flows and market stability in the face of such a large-scale rebalancing.

Historically, periods of prolonged outperformance by one region are often followed by a rotation of leadership. The dot-com bust of the early 2000s, for example, saw a significant shift away from US tech stocks towards value and international equities. Similarly, the commodity supercycle of the 2000s saw emerging markets and resource-rich economies thrive. While each historical period has its unique drivers, the underlying principle of mean reversion in relative performance often holds true. Goldman Sachs' current prediction suggests that the market may be on the cusp of another such significant rotation, driven by fundamental valuation discrepancies and evolving global economic dynamics.

Navigating the Next Decade: Strategic Pivots and Emerging Opportunities

Looking ahead, the next decade promises to be a period of significant strategic pivots for investors and corporations alike. In the short term, we might observe an initial flight of capital from highly-valued US assets, potentially leading to increased volatility in the S&P 500 (INDEXSP: .INX) and a corresponding uptick in demand for international equities. This immediate reaction could create temporary dislocations, offering astute investors opportunities to acquire quality US assets at more reasonable valuations, while simultaneously building positions in international markets before broader adoption.

In the long term, the implications are more profound. Investors will need to recalibrate their expectations for US equity returns and consciously seek growth and value outside their domestic borders. This will necessitate a deeper understanding of diverse geopolitical landscapes, regulatory environments, and economic drivers in regions like Europe, Japan, and particularly the rapidly expanding emerging markets. Fund managers may launch new products focused on specific international regions or global multi-asset strategies designed to capture this anticipated outperformance. Companies, especially those with global aspirations, will need to adapt their capital allocation strategies, potentially prioritizing expansion and investment in high-growth international markets over domestic endeavors.

Market opportunities will emerge in sectors and geographies that have been comparatively overlooked. For instance, the industrial and consumer discretionary sectors in developing Asian economies, or renewable energy initiatives across Europe, could present compelling investment cases. Challenges will include navigating currency fluctuations, geopolitical risks, and varying levels of market liquidity in less developed markets. Potential scenarios range from a gradual, orderly rebalancing of global portfolios to a more rapid and disruptive shift, depending on macroeconomic events and central bank policies. Investors should prepare for a landscape where active management and a truly global perspective become increasingly critical for achieving desired returns.

A New Era for Global Investment: Key Takeaways and Future Watchpoints

Goldman Sachs' bold prediction marks a potential turning point for global investment strategies, signaling the end of an era dominated by US equity outperformance and ushering in a decade where international markets are expected to take the lead. The core takeaway is clear: the robust growth and attractive valuations found outside the United States, particularly in emerging markets, present a compelling case for diversification. Investors who have historically maintained a heavy US bias are now urged to re-evaluate their allocations to achieve a better risk-return balance in the coming years.

Moving forward, the market will be characterized by a heightened focus on global economic indicators, geopolitical stability, and the specific drivers of growth in various international regions. The anticipated decline in the US dollar could serve as an additional catalyst, amplifying returns for non-US assets when translated back into dollars. This shift underscores the importance of a nuanced, globally-aware investment approach, moving beyond a simple "buy the S&P 500" strategy.

Investors should closely watch for several key developments in the coming months. These include changes in corporate earnings growth rates across different regions, particularly how emerging market companies deliver on their growth potential. Monitoring central bank policies globally, especially regarding interest rates and currency interventions, will also be crucial. Furthermore, tracking capital flows and fund allocations by major institutional investors will provide early indications of whether this predicted shift is indeed gaining momentum. Ultimately, the message from Goldman Sachs is a call to broaden horizons, embrace global opportunities, and prepare for a fundamentally different investment landscape over the next ten years.

This content is intended for informational purposes only and is not financial advice