Goldman Sachs Forecasts $300 Billion Foreign Investment in U.S. Stocks in 2025

Goldman Sachs strategist David Kostin and his team have projected that foreign investors are likely to continue purchasing U.S. stocks in 2025, although at a slightly slower pace compared to 2024. The team anticipates that international investors will acquire $300 billion worth of U.S. stocks this year, down from $304 billion in 2024. This forecast is supported by increased liquidity and a stronger outlook for economic and earnings growth, which are expected to drive long-term demand for U.S. equities.

Kostin's team highlights several factors that could influence this trend. Increased liquidity in the market, coupled with a more robust economic and earnings growth outlook, is expected to sustain the demand for U.S. stocks. However, there are risks that could impact this positive outlook, including currency and economic uncertainties, as well as disappointing returns from artificial intelligence-related expenditures.

Despite the relatively weak performance of the U.S. market, Goldman Sachs remains optimistic about the inflow of foreign capital. The firm expects that foreign investors will continue to be net buyers of U.S. stocks in 2025, with an estimated net purchase of $300 billion. This optimism is underpinned by the belief that the recent decline in investor confidence and the contrasting performance of global stock markets may signal a bullish outlook for U.S. equities.

The changing trends in stock holdings are also contributing to this positive sentiment. As foreign investors continue to allocate funds to the U.S. market, the overall demand for U.S. equities is expected to remain strong. This trend is likely to be driven by the perception of the U.S. market as a safe haven for investments, given its relative stability and strong economic fundamentals.

In summary, while the pace of foreign investment in U.S. stocks may slow down slightly in 2025, the overall trend is expected to remain positive. Increased liquidity, a stronger economic outlook, and the perception of the U.S. market as a safe haven are all factors that are likely to drive continued demand for U.S. equities. However, investors should remain cautious of potential risks, including currency and economic uncertainties, as well as the performance of artificial intelligence-related expenditures.