Goldman Sachs Says 2027 Earnings Growth Will Slow — but Not the Bull Market

Goldman Sachs expects earnings growth to fade heading into 2027 — and it's telling clients to pay a premium for the companies that can keep growing anyway.

The bank's new 2027 outlook report advises investors to concentrate their attention on what it calls "companies that can sustain growth as it becomes more scarce." That line is the core of the strategy: earnings-per-share growth, robust this year, becomes a rarer commodity as 2027 approaches, and scarcity reprices the asset.

Earnings are still expanding at a decent clip right now, according to Goldman Sachs' strategists. On that basis, the firm thinks equities keep rising. The bull market survives the earnings deceleration in its view — the composition of the winners just changes.

Where does Goldman Sachs see the fastest earnings growth?

Asia takes the title. The bank's strategists identify Asia as the region with the fastest expansion in earnings-per-share growth next year.

But speed alone doesn't win the allocation. Goldman Sachs sees enough risk elsewhere in the picture that it refuses to simply load up on the fastest growers. Instead, the strategists adopt what the report frames as a risk-adjusted approach — balancing the earnings story against the threats coming from other markets.

What risks made Goldman Sachs cautious on Asia?

Three factors drove the bank's hedged stance, according to the report:

• Bond markets, which the strategists flag as a threat to equity returns
• Oil prices, tracked by the BRN00 benchmark, another cited pressure point
• Peaking AI capex trends, which Goldman Sachs expects to roll over as a growth driver

Those three risks persuaded the strategists not to chase Asia's earnings leadership outright. The region gets the fastest growth on paper, but the risk-adjusted case pushes the allocation elsewhere.

What does the 2027 outlook recommend?

Goldman Sachs' regional scoreboard for 2027 is blunt:

• United States — favored. The bank's strategists back American equities in the 2027 outlook.
• Japan — favored. Japan joins the U.S. as the other market the firm likes.
• Emerging markets and Asia — neutral. Despite Asia's projected earnings leadership, the firm stays on the sidelines, with emerging markets tracked by the EEM ETF.
• Europe — underweight. The continent ranks lowest in the strategists' regional preferences.

The split between Asia's growth and Asia's neutral rating is the telling detail. Goldman Sachs projects the fastest EPS expansion in that region next year, yet bond-market risk, oil prices and a peak in AI capital spending outweigh the earnings case when the math is done risk-adjusted.

What's the trade for investors?

The report's through-line is selectivity. As earnings growth thins out into 2027, the strategists argue the market will concentrate rewards in the minority of names that defy the slowdown. Investors should, in the firm's words, attach a premium to "companies that can sustain growth as it becomes more scarce."

That framework marks a shift from a rising-tide year — 2024's robust earnings growth lifted markets broadly — to a stock-pickers' setup where regional allocation and growth durability do the heavy lifting. Goldman Sachs' answer to that shift is U.S. and Japanese equities, a neutral hand on emerging markets and Asia, and a step back from Europe.

The so-what for portfolio construction: 2027 rewards who grows when growth gets scarce, not who grew when it was easy.