Goldman Sachs Bets Big on Equities Over Credit as Cycle Peaks
Goldman Sachs has published its 12-month investment outlook, recommending that investors prioritize equities over credit assets. The bank cited growing risks in credit markets as the economic cycle enters its later stages.
In an investor note released on Tuesday, Goldman Sachs maintained an overweight stance on equities and an underweight stance on credit assets. Strategist Christian Mueller-Glissmann explained that the firm is prioritizing corporate earnings growth, which it expects to support equities outperforming bonds and credit assets over the next year.
The bank's analysis suggests that while growth is slowing, it remains resilient, with low U.S. recession risk, moderating inflation, and limited central bank tightening ahead. However, Goldman pointed out that risk appetite and prices of cyclical assets are already elevated, making further upside dependent on falling interest rates.
The bank advised style diversification within equities as well, recommending portfolio construction utilizing low-volatility stocks, high-dividend stocks, gold, and real assets to mitigate volatility risks. Goldman maintained a cautious stance on credit markets, citing tight credit spreads and potential headwinds from late-cycle releveraging and rising AI-related debt issuance.