Goldman’s Kostin says households are biggest buyers of U.S. stocks

Investing.com -- Goldman Sachs chief U.S. equity strategist David Kostin expects American households to remain the dominant force behind stock market demand next year, pointing to a favorable macro backdrop and healthy consumer finances.

In the bank’s new weekly report, Kostin’s team projects households will buy a net $520 billion of equities in 2026, a 19% increase from this year.

“A macro backdrop of accelerating economic growth, falling unemployment, slowing inflation, and declining cash yields should support continued household demand for equities,” the strategists said.

They do not expect that demand to come from a major rotation out of money market funds, flagging that households hold just 15% of assets in cash, and that past Fed cutting cycles have not triggered large reallocations.

Households currently own about 40% of the U.S. equity market, with the top 10% by wealth holding nearly 90% of that total.

While affluent investors account for most ownership, Kostin points out that equity demand from middle-wealth households has tended to move in tandem with speculative trading activity.

Recent fund flow data also highlight rising participation. Following $100 billion of outflows from equity funds over the summer, inflows have rebounded by more than $70 billion in the past few weeks, according to the report.

The strategists see corporate America as the second-largest buyer in 2026, purchasing roughly $410 billion of stock.

Buybacks among Russell 3000 companies hit a record $648 billion in the first half of 2025, and authorizations of $1.1 trillion so far this year suggest that repurchases should remain robust as earnings growth, rate cuts, and easing policy uncertainty support activity.

Foreign investors, who have been the biggest source of U.S. equity demand so far in 2025, are expected to slow their pace to $250 billion next year, down 56% from this year’s level.

Mutual funds and pension funds, by contrast, are forecast to remain net sellers, unloading $580 billion and $200 billion of equities, respectively, as they continue shifting into fixed income.

Kostin described overall investor positioning as neutral, with their sentiment indicator showing its first positive reading since February, and only passive fund flows and retail margin debt stretched relative to history.

Yet, isolated “pockets of froth” persist, particularly in speculative areas such as quantum computing, cryptocurrency, and drone stocks, which have each surged more than 50% in the past month.

“Many of these companies rank among the U.S. stocks with the highest recent share trading volumes,” the strategists added.

Although the surge in speculative names has grabbed attention, Goldman’s team emphasises that the bulk of expected equity demand is being driven by structural forces — household income, corporate cash flows and rate dynamics — rather than a broad risk-on shift in positioning.