Goldman Sachs analysts, led by Chief U.S. Equity Strategist David Kostin, suggest that investors adopt more defensive strategies as optimism about the U.S. economy and stock market reaches near-record levels. They predict U.S. economic growth in 2025 will exceed market consensus, supported by potential fiscal policy changes. Despite this, the market is already factoring in significant GDP growth.
Since election day, cyclical stocks have outperformed defensive stocks by five percentage points. Given current stock prices and widespread optimism, Goldman Sachs highlights the appeal of defensive sectors like utilities and healthcare. Utilities, in particular, are expected to benefit from the AI boom, as AI data centers drive unprecedented electricity demand. Healthcare stocks are also attractive due to historically low valuations.
Goldman Sachs, UBS, and JPMorgan share a positive outlook on these sectors. However, analysts caution about potential policy uncertainties affecting healthcare. The model also suggests increasing holdings in materials, software, services, and real estate, while industrial and tech hardware stocks may underperform.
