Goldman Sachs Strategy Chief: Middle East conflicts and AI-related disruptions are all buying opportunities on dips

By the beginning of 2026, the global capital markets have experienced two rounds of disruptions: concerns related to AI and escalating conflicts in the Middle East. In response, Goldman Sachs’ strategy team stated that, despite current stock market valuations being high and short-term correction risks increasing, the probability of the market entering a long-term bear market remains limited, and investors can view corrections as opportunities to position.

According to reports, the team led by Peter Oppenheimer, Goldman Sachs’ Chief Global Equity Strategist and Head of European Macro Research, presented these conclusions in their latest report on Wednesday.

Oppenheimer noted in the report: “Given current valuation levels, we believe the market faces a relatively high risk of correction; however, this correction is more likely to present a buying opportunity, with a lower risk of developing into a prolonged, deeper bear market.”

(During Tuesday’s trading, the S&P 500 index briefly fell to a new low since late November last year, Source: TradingView)

Interestingly, Morgan Stanley’s Chief US Equity Strategist Mike Wilson and his team also stated in a report this week that geopolitical events typically do not cause sustained stock market volatility. Risk asset prices may decline initially, but this will create “buy-the-dip opportunities, as the market will recover from the initial correction.”

The Goldman Sachs team indicated that as stock returns gradually spread across different regions and investment styles, global equity valuations have been pushed above average, with all sectors currently appearing overvalued. Coupled with a strong US-led bull market, the stock market becomes more vulnerable to potential shocks, such as the impact of escalating Middle East tensions on global oil and natural gas markets.

Oppenheimer said: “The longer this uncertainty persists, or the more severe the shocks to energy supply, the higher the market’s perception of risks to economic growth and inflation.”

However, he also emphasized that, most recent geopolitical shocks have not had a lasting impact on the markets.

The strategist pointed out that at the index level, the market has remained relatively stable overall until recently, characterized by rapid sector and stock rotation and increased volatility. The report also mentioned that strong earnings growth in regions like the US and emerging markets, along with the potential for sustained economic growth, will keep the risk of a deeper bear market at a relatively low level.

Regarding allocation strategies, analysts wrote: “We still recommend broader diversification across regions, investment factors, and sectors to enhance risk-adjusted returns.”

(Source: Cailian Press)