Additional Coverage:
- Goldman Sachs CEO David Solomon has 4 big predictions for markets and the economy in the next few years (businessinsider.com)
Goldman Sachs CEO Shares Optimistic Outlook, Cautions on Market Drawdown
Milan, Italy – Goldman Sachs CEO David Solomon delivered a largely upbeat assessment of the U.S. economy and financial markets this week, though he tempered his optimism with a few key predictions for investors to consider. Speaking at Italian Tech Week, Solomon expressed confidence in the long-term trajectory, despite growing concerns in some corners about market valuations and economic slowdowns.
“I sleep very well and I’m not going to bed every night worried about what will happen next,” Solomon stated, reflecting his overall calm amidst current market dynamics.
However, while his long-term view is positive, Solomon outlined four significant points for what lies ahead for markets and the economy.
Stock Market Could See a Drawdown
Solomon anticipates a potential “drawdown” in equity markets within the next 12 to 24 months. He attributed this to a historical pattern where markets tend to “run ahead” of their true potential when a new, exciting technology emerges – a dynamic he believes is currently at play with artificial intelligence.
The S&P 500, a key benchmark index, has seen a significant rally this year, up 15% year-to-date. Solomon noted that a market correction wouldn’t be surprising given this robust performance. A recent report from Goldman Sachs also estimated a greater than 20% chance of an S&P 500 drawdown within the next year.
Bull Market to Create Winners and Losers
Drawing parallels to the internet boom of the 1990s and early 2000s, Solomon predicted that the current investment cycle will inevitably produce both major successes and significant failures. Just as companies like Amazon thrived while others faded, he expects a similar outcome from the current wave of capital deployment.
“I guarantee you, at the end of the move, there’ll be a bunch of winners and there’ll be a bunch of losers,” Solomon remarked, emphasizing that this is a typical pattern for any large investment cycle. Investors should expect some capital to yield attractive returns, while other investments may not deliver.
U.S. Economy Expected to Remain Strong
Looking ahead, Solomon projects an acceleration in U.S. economic growth by 2026. He cited powerful catalysts such as aggressive fiscal stimulus, substantial infrastructure spending, and considerable capital expenditures as drivers that could offset potential headwinds, including the impact of trade tariffs.
While GDP growth is expected to hover just under 2% moving forward—slightly below its historical trend—Solomon still considers this indicative of an economy “in pretty good shape.” He did, however, advise close monitoring of two key factors: the labor market, which has shown recent signs of weakness, and inflation, particularly the potential lasting effects of trade policies.
Dealmaking Poised for a Ramp-Up
Finally, Solomon anticipates a significant increase in dealmaking activity, particularly in 2026. This surge is expected to be fueled by a combination of looser regulatory environments and corporate leaders’ drive to enhance competitiveness within their respective industries.
Goldman Sachs analysts have already reported a 29% year-over-year increase in the dollar value of mergers and acquisitions (M&A) for 2025, alongside an 8% rise in the number of deals. The bank projects an additional 15% increase in the number of deals next year, signaling a robust period for corporate transactions.