Goldman Sachs Asset Management forecasts that emerging market stocks will continue their upward momentum, driven by solid earnings growth and structural expansion in the artificial intelligence industry. Catherine Bodlmeier, co-head of fundamental equity portfolios for the Americas at Goldman Sachs Asset Management, made the assessment on '20일 (local time)' via podcast, citing corporate earnings improvements as the primary driver behind recent emerging market equity strength. The forecast is grounded in the observation that emerging market equity gains are based on corporate profit improvements rather than simple valuation re-rating, suggesting potential for further appreciation.
Emerging Markets Project 55% Earnings Growth for 2026
Emerging market equities are projected to achieve an earnings growth rate of approximately 55% for 2026, more than double the earnings growth rate of Standard & Poor's 500 companies, according to Goldman Sachs Asset Management. Bodlmeier stated that "emerging market stocks are still trading at a level discounted by more than 40% compared to the United States." She noted that as investors began recognizing this valuation gap, approximately $50 billion flowed into emerging markets this year, representing the largest inflow in the past 20 years.
Emerging Markets Control 80% of AI Hardware Exports
The growth of the artificial intelligence industry serves as an additional driver for emerging market equity appreciation. Bodlmeier emphasized that "the important point is that emerging countries occupy a dominant position in the AI ecosystem," adding that "they are responsible for approximately 80% of AI hardware exports." She stated that "as AI-related investment continues to evolve, a broader range of countries and companies can benefit," noting that "particularly companies and countries associated with bottleneck sections of the supply chain can be the targets."
Emerging Market Stocks Trade at 40% Discount Despite $50 Billion Inflows
Bodlmeier assessed that "considering exposure to AI, attractive valuations, and strong earnings, emerging markets can continue to rise next year as well." The combination of the 40%+ valuation discount relative to US equities and the approximately $50 billion in inflows this year—the largest in 20 years—underscores investor recognition of the earnings improvement narrative in emerging market stocks.
FAQ
What earnings growth rate did Goldman Sachs project for emerging markets in 2026?
Goldman Sachs Asset Management projected that emerging market equities will achieve an earnings growth rate of approximately 55% for 2026, more than double the earnings growth rate expected for S&P 500 companies.
What percentage of AI hardware exports do emerging markets control?
According to Catherine Bodlmeier of Goldman Sachs Asset Management, emerging countries are responsible for approximately 80% of AI hardware exports and occupy a dominant position in the AI ecosystem.
How much capital flowed into emerging markets this year?
Approximately $50 billion flowed into emerging markets this year, representing the largest inflow in the past 20 years, as investors recognized the valuation gap between emerging market stocks and US equities.
