Goldman Sachs 2026 US stock sector outlook: industrial technology stocks are still “bastards”, auto stocks need to be “carefully selected”

The Zhitong Finance App learned that Goldman Sachs recently released the 2026 outlook report for the US automotive and industrial technology sector, indicating that the overall performance of this sector in 2025 was outstanding, with industrial technology stocks and auto stocks outperforming the S&P 500 index. Looking ahead to 2026, Goldman Sachs expects industrial technology stocks to continue to outperform the market with cyclical recovery and long-term growth opportunities such as data center/artificial intelligence (AI), energy infrastructure, and robotic automation; for the automotive sector, given that the industry's sales volume is already at a historical normal level and future growth is weak, investors should adopt a selection strategy and focus on individual stocks with company-specific drivers.

The industry performed well in 2025, but the characteristics of fluctuations were obvious

According to the report, since the beginning of 2025, the median stock price of automotive original equipment manufacturers (OEMs) and tier-1 suppliers covered by Goldman Sachs has risen 23%, while the median increase of 63% for industrial technology stocks has reached 63%, while the S&P 500 index has only risen 16% during the same period. This performance not only reflects the trend in terminal demand, but also benefits from the expansion of valuation multiples.

However, the industry fluctuated significantly throughout the year. Automobile stocks fell sharply in spring due to tariff policies, then gradually rebounded due to lower tariff levels, while data center-related stocks fluctuated in performance due to changes in large-scale capital expenditure expectations.

2026 outlook: Industrial technology stocks lead the selection of automobile stocks

For 2026, Goldman Sachs expects interest rate cuts to support valuation, but the actual impact on stock performance depends on the macro context — historical data shows that if interest rate cuts are not driven by a recession, similar to the 1995-1997 situation, the stocks covered by it tend to perform well. Currently, Goldman Sachs expects further interest rate cuts in 2026. Its economics team believes that the risk of a recession in the US economy is limited, and real GDP is expected to grow by 2-2.5% in 2026.

Specifically, Goldman Sachs predicts that industrial technology stocks will continue to outperform the market in 2026. On the one hand, the industry ushered in a cyclical recovery after the end of the inventory removal cycle. On the other hand, long-term growth opportunities such as data centers/AI, energy infrastructure, robotics and automation continued to be unleashed, and the bank drastically raised capital expenditure estimates for major hyperscale companies. Growth rates are expected to reach 79% and 36% in 2025 and 2026, respectively. Furthermore, some of the industrial technology companies covered by the bank (such as Keysight Technologies (KEYS.US), Amphenol (APH.US), and TEL.US (TEL.US), all rated “buy”) are generally more defensive during the economic downturn, which means that these stocks are expected to show a comparative advantage when the market environment tightens.

In contrast, Goldman Sachs suggests adopting a selective strategy for auto stocks. Since global automobile production is currently at a historically normal level, subsequent sales growth is expected to slow down, and investors should focus on companies with individual stock drivers. The bank expects global automobile production and sales to maintain low single-digit growth in 2025 and 2026, and the industry's sales forecast for this year and next two years is basically the same as at the beginning of the year. Goldman Sachs is optimistic about targets such as General Motors (GM.US), Borg Warner (BWA.US), and Visteon (VC.US). Although falling interest rates will benefit the industry, it is more reflected in optimizing the product price structure rather than increasing sales volume. At the same time, local Chinese automobile manufacturers are accelerating their international expansion, and supply chain companies' business exposure to these manufacturers will become an important competitive advantage.

Key topics and industry trends

Goldman Sachs also focused on analyzing two major topics: data centers and physical AI.

Goldman Sachs said that the data center and AI infrastructure market will continue to be strong in 2025. Although the return on AI-related investment of hyperscale enterprises has always been a hot topic of discussion in the market, in terms of its coverage, the more specific focus is on increasing the ability of enterprises to achieve impressive profit margins (especially in the context of changes in capital expenditure growth rates and technology iterations (such as Rubin, Rubin Ultra and ASIC chips)). In the field of electronic manufacturing services (EMS) and power supply and refrigeration, Goldman Sachs expects that the combination of new technology/products, services, and scale effects will drive continuous improvement in corporate profit margins, including Flex.US (FLEX.US), and Vertiv Holdings (VRT.US); in the field of electronic components, companies such as Amphenol and Tyco Electronics will continue to benefit from opportunities to increase the value of single-device components.

In the field of autonomous driving and physical AI, Goldman Sachs said that the pace of commercialization of autonomous driving technology has accelerated markedly, and the focus has shifted from technical feasibility to large-scale speed and profitability. In 2025, the number of cities where leading companies operate has increased from 3 in the US at the beginning of the year to 8 including international markets outside of China, and is expected to reach about 20 by the end of 2026. The impact of this on the profits of related companies (including autonomous driving service providers, car manufacturers, and parts suppliers) will increasingly be critical.

Among them, for Tesla (TSLA.US), Goldman Sachs believes that the company has a significant cost advantage in the autonomous taxi market, but the scope of software adaptation and mileage will be the key to its profit. Furthermore, Tesla's layout in the field of physical AI is increasingly leaning towards humanoid robots — Goldman Sachs believes this market has broad prospects, but it will take at least a few years to achieve large-scale deployment. Tesla's Optimus humanoid robot plans to start mass production of the third generation in 2026 and gradually launch fourth and fifth generation products from 2027 to 2028, with a long-term target annual production capacity of 1 billion units.