Kostin highlights opportunities in consumer and healthcare stocks, along with companies poised to generate more revenue from AI.
Goldman Sachs chief equity strategist David Kostin is retiring after 31 years, and one question keeps following him out the door: Is the market in a bubble?
His departure, first announced in September, was further detailed in a firm podcast released Thursday. Strategist Ben Snider will be stepping into his role, while Kostin remains as an adviser.
Reflecting on three decades of market evolution, Kostin said that while tools and data have become more sophisticated, the core framework remains the same: the economy, earnings, valuation, and money flow. “I think of those as the four legs of a table when identifying opportunity,” he said.
Today, he sees steady VIX readings and a strong third-quarter earnings season as encouraging signs for 2026.
The biggest question he’s asked right now: Are we in an AI bubble?
Kostin’s view—not in public markets. AI-focused giants are trading near 30x earnings, well below the 40x multiples seen post-COVID and the 50x peaks of the dot-com era. IPO activity is also far more subdued than in 1999 or 2021.
Private markets, however, are a different story. Sky-high valuations and vendor financing risks point to what he calls “unsustainable” pricing.
On where opportunities lie now, Kostin points to the consumer sector. Despite worries about rising unemployment, he expects middle-income households to benefit from tax reform in 2026.
He also highlights healthcare stocks, which sit at 30-year valuation lows relative to the broader market, and companies positioned to increase revenue—not just cut costs—through AI adoption.
Goldman’s forecast for the S&P 500 stands at 7,600 for next year, slightly above MarketWatch’s Wall Street consensus of 7,500.
