Look, we get it. For the past couple years, your investment strategy has basically been “buy big tech and pray.” And honestly? It worked pretty well. But Goldman Sachs just dropped their 2026 outlook, and spoiler alert: they think it’s time to branch out a little.
Greg Calnon from Goldman Sachs Asset Management basically said what we’ve all been thinking but were too scared to admit: maybe there’s life beyond the Magnificent 7. Revolutionary stuff, right?
Here’s the thing though – this isn’t about abandoning your beloved mega-cap darlings. It’s about not putting all your eggs in the “AI will save us all” basket. Because while everyone’s been obsessing over which hyperscaler will dominate the robot uprising, some pretty interesting opportunities have been quietly brewing elsewhere.
Small Caps: The Scrappy Underdogs
Remember small-cap stocks? Those companies that aren’t trying to build their own ChatGPT competitor or corner the global cloud market? Yeah, Goldman thinks they’re actually positioned pretty well for the AI boom – just in a different way.
Instead of going head-to-head with Microsoft and Google (which, let’s be honest, sounds like financial suicide), these smaller companies are finding their own little AI niches. Think of them as the specialized tool makers during the gold rush – they’re not digging for gold, but they’re selling the shovels.
Plus, and this might shock you, small-cap valuations are actually reasonable compared to their larger cousins. The Russell 2000 is up about 11% this year, which is solid but not “we’ve lost all sense of reality” territory.
Healthcare: The Surprise Winner
Healthcare stocks getting love in 2025? Plot twist nobody saw coming. But here we are, with the iShares US Healthcare ETF up 14.5% year-to-date, and Goldman saying this is just the beginning.
Turns out, when you combine AI with healthcare, you don’t just get robot doctors (though that would be cool). You get actual innovation in drug discovery, diagnostics, and treatment. Who knew that teaching computers to read X-rays and analyze genetic data would be profitable?
It’s like healthcare finally figured out how to join the AI party without looking completely out of place.
International Stocks: The World Beyond America
Here’s where Goldman gets really spicy. They’re basically saying that for the next decade, international stocks are going to make US stocks look like that friend who peaked in high school.
Their math is brutal: they expect the S&P 500 to return just 6.5% annually over the next 10 years. Meanwhile, emerging markets? They’re looking at nearly 11% annual returns. Asian stocks (excluding Japan) are projected at 10.3%. Even Europe is expected to outperform the US.
The Vanguard Total International Stock Index Fund is already up 27% this year, which is basically its way of saying “told you so.”
As Calnon put it: “It doesn’t need to be at the expense of the US. But I think we’ve been so caught up in, it’s the US or nothing, that other markets can participate.” Translation: maybe American exceptionalism doesn’t apply to stock returns.
The Bottom Line
Look, nobody’s saying you need to dump your NVIDIA shares and go all-in on Romanian biotech companies. But maybe – just maybe – it’s time to acknowledge that the world is bigger than Silicon Valley.
The Fed’s still cutting rates, which is good for risk assets across the board. The AI boom is real, but it’s not just happening in the companies with trillion-dollar market caps. And sometimes, the best opportunities are hiding in plain sight while everyone else is staring at the shiny objects.
So here’s your homework: take a look at your portfolio. If it looks like a tech conference attendee list, maybe it’s time to diversify. Your future self (and your returns) might thank you.