Goldman Sachs cuts earnings growth prospects, seeing investors transition from “excited” to “boring” – Agilent Technologies (NYSE: A), Davita (NYSE: DVA)

David Kostinchief equity strategist of the United States Goldman Sachshas revised his revenue growth forecast for citing weaker economic outlook and highlighting a shift in market trends.

what happened: On CNBC’s “The Street Bust”, Costin discusses his revised earnings growth forecast and market trends. Originally expected to be 11%, the revenue growth forecast for 2025 has now been adjusted to 9%.

Still, Costin insists that revenue growth remained 7% in 2026, with no change. He also said the S&P’s 500-year year-end target remains at 6,500, indicating an 11% increase in current levels.

Costin also pointed to changes in investment strategies, with investors changing from “exciting” (cyclical) to “boring” (defensive stocks), which is due to tariff uncertainty. He identified health care and consumers’ staple food as the preferred sector for its stability and sensitivity to the ongoing trade war. He also named it Hot Fisher TMO and Agilent Technology one As a powerful investment option.

Additionally, he noted that the focus is shifting from AI infrastructure and high-scoring standards to software companies that will use AI to expand their revenues, e.g. mongodb MDB.

According to Costin, the uncertainty of tariffs makes forecasting difficult, but the model shows that earnings will be affected by unit volume and profit margins. Strategists estimate that a 5% increase in tariffs could reduce revenue growth by 1-2%.

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Why it matters: This shift in this investment strategy is worth noting given the bullishness of technology and finance by institutional investors in the fourth quarter of 2024. Seeing investors retreat from health care, Costin now sees it as the preferred sector. even Warren buffet‘ Berkshire Hathaway Trim its stake in healthcare providers Davita DVAreduce ownership to 45%.

These market shifts and Costin’s revised forecasts highlight uncertainty in the current economic environment, but also highlight potential opportunities for defense sectors and AI-driven businesses. That being said, Costin expects a drop in bond yields to offset some tariff impacts, potentially benefiting the economy. He concluded that GDP growth is the main driver of returns, with interest rates and inflation playing a secondary role.

S&P 500 Index spy Wednesday climbed 1.12% to 5,842.63 after the president Donald Trump Automatic tariffs are delayed to Canada and Mexico for one month.

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Disclaimer: The content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.