In a recent interview, Goldman Sachs CEO David Solomon outlined a cautiously optimistic view of the U.S. economy and financial markets, tempered by warnings of potential turbulence ahead. Speaking at Italian Tech Week, Solomon highlighted the resilience of the American economy amid geopolitical uncertainties and a softening labor market, suggesting that stimulus measures and robust technology spending could propel growth into 2026.

He emphasized that while the current bull market has driven impressive gains, particularly in tech-heavy sectors, investors should brace for a correction. Solomon drew parallels to past market manias, such as the dot-com bubble, noting that rapid capital deployment in emerging technologies often leads to overvaluation and subsequent pullbacks.

Navigating the AI Boom and Its Risks

Solomon was particularly vocal about artificial intelligence, acknowledging its transformative potential but cautioning against unchecked enthusiasm. According to reports from Business Insider, he predicted that the AI trade would produce clear winners and losers, with some companies thriving while others falter as the hype gives way to practical realities.

He stressed that not all AI investments will yield returns, echoing sentiments from historical tech bubbles. “There will be a lot of capital that was deployed that didn’t deliver returns,” Solomon remarked, as detailed in a Fortune article, underscoring that this cycle is “not different this time.”

Economic Acceleration Amid Headwinds

On the broader economy, Solomon expressed confidence in an acceleration driven by fiscal stimulus and corporate investments in innovation. Despite challenges like tariffs and a slower job market, he described the U.S. economy as “still in pretty good shape,” per insights shared in a Bloomberg video interview.

He anticipates this momentum to carry into 2026, outweighing near-term drags. However, Solomon warned of a likely stock market drawdown within the next 24 months, potentially a 5% to 10% drop, as markets adjust to inflated valuations in AI and related sectors.

Dealmaking Revival and Strategic Advice

Turning to investment banking, Solomon forecasted another strong year for mergers and acquisitions, building on recent momentum. CNBC coverage of his remarks noted his expectation of increased deal activity as companies capitalize on economic tailwinds and lower interest rates.

He advised clients to proceed cautiously, especially regarding tariffs, urging them to “go slow” and await policy clarity. This guidance reflects Goldman’s role in navigating volatile environments, with Solomon highlighting the bank’s own AI spending as part of a broader tech integration strategy.

Market Skepticism and Long-Term Outlook

Solomon’s comments also touched on investor skepticism in overhyped areas, suggesting that while AI presents genuine opportunities, discernment is key. As reported by MarketScreener, he discussed Goldman’s internal tech investments, positioning the firm to benefit from AI without overcommitting.

Overall, Solomon’s outlook paints a picture of balanced growth, with the economy poised for acceleration but markets facing inevitable corrections. He remains sanguine about the bull run’s sustainability in the short term, stating he “sleeps very well” despite the froth, according to Morningstar. For industry insiders, this signals a need for vigilant portfolio management amid AI-driven exuberance and geopolitical risks, with dealmaking likely to provide a buffer against volatility. Solomon’s predictions underscore the cyclical nature of markets, reminding stakeholders that enthusiasm must be matched with realism to weather the coming shifts.