Goldman Sachs expects earnings growth to slow sharply across major indices in 2027. The firm notes that earnings growth is nearly halving. Despite this, stocks have already priced in much of the deceleration.
The investment bank does not see this slowdown ending the bull market. Market participants have anticipated weaker profit expansion for some time. Current valuations reflect that outlook.
Goldman advises investors to concentrate on companies still posting strong earnings growth. Such firms are becoming increasingly rare. Strong growth is turning into a scarce commodity.
The recommendation shifts focus from broad index exposure to targeted stock selection. Investors should identify businesses that can sustain earnings momentum. This approach may offer better returns as overall growth fades.
Earnings deceleration does not automatically signal a market downturn. History shows bull markets can persist through slower profit growth. The key is where that growth remains concentrated.
Goldman’s stance suggests a more selective strategy for the coming years. Broad market gains may become harder to capture. Active stock picking could matter more than passive indexing.
The firm’s outlook balances caution with continued optimism. Investors are urged to monitor earnings quality closely. Companies with durable growth profiles stand to benefit most.
