Goldman Sachs warns that household demand for U.S. equities could become increasingly vulnerable to higher interest rates and AI-related economic disruption. Households bought $840 billion of equities in the first half of 2026, and the bank expects a rise in equity supply next year.
Goldman Sachs warned that the sustainability of household demand for U.S. equities could become increasingly vulnerable to higher interest rates and the economic disruption associated with artificial intelligence. The brokerage identified both as major uncertainties for equity valuations over the coming years.
Households carry the market
The bank said household demand had become a critical pillar for the US stock market. Investors purchased $840 billion of equities during the first half of 2026, more than offsetting weaker demand from US corporates.
Households directly own 42% of the US equity market and control a majority when indirect holdings through retirement accounts, mutual funds and ETFs are included. Their equity allocations have climbed to a record 55% of financial asset portfolios. Ownership is concentrated, however: the wealthiest 10% of households hold 87% of total household equity assets.
Rates and AI shape what comes next
Goldman said the trajectory of interest rates and the extent of AI-related disruption would rank among the most important determinants of how household allocations evolve. Higher yields on cash and bonds can make equities less attractive, while the broader economic implications of AI remain an important source of uncertainty for long-term investment behaviour.
Still, Goldman's baseline forecasts remain supportive for 2027, assuming a stable labour market and modest declines in borrowing and market yields. The bank noted that equity fund flows have historically improved alongside rising household wealth, falling unemployment and reduced recession concerns.
Corporate supply is rising
The demand outlook is becoming more consequential as corporate supply increases. U.S. public and private companies issued a net $175 billion of equity in the first half of 2026. Goldman expects net public equity supply, including expiring lockups, to rise next year by its largest amount since 2000.
Source: Investing.com
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