Goldman Sachs warns global equities face rising risks of near-term correction amid geopolitical tensions and AI spending concerns. Strategists led by Peter Oppenheimer note these factors create significant headwinds for risk assets to absorb in the short term. The bank does not expect a full bear market despite current challenges, with an unusually strong equity rally since pandemic lows leaving markets vulnerable to near-term volatility.

Valuations appear stretched across regions with equity risk premia declining sharply to levels seen before the financial crisis. Market rotations include shifts away from longer-duration tech stocks toward companies tied to physical investment and infrastructure. This represents one of the weakest periods for technology relative returns in 50 years, coinciding with a broader rotation from growth into value stocks and narrowing valuation gaps.

Despite these headwinds, Goldman argues the broader backdrop should limit downturn severity. Resilient economic growth, solid earnings momentum, and healthy private-sector balance sheets should cushion equities. Historical geopolitical shocks typically produced about 6% equity declines over roughly 18 days. With correction risks elevated, such pullbacks could present buying opportunities for investors, the strategists conclude.