Goldman’s Ashok Varadhan gives three reasons to stay invested

Goldman Sachs co-head of Global Banking & Markets Ashok Varadhan said investors should remain in markets, citing three forecasts that underpin his constructive view. For investors searching for Goldman stay invested reasons, his case rests on no further Federal Reserve rate increases this year, eventual inflation relief from artificial intelligence productivity and a decline in oil prices later in 2026.

Varadhan made the comments in Goldman’s The Markets episode, recorded Aug. 5 and published Aug. 7. He said U.S. stocks could “probably grind higher,” after a difficult July that included renewed war concerns, worries over possible Fed tightening and a sharp reversal in technology momentum trades, according to Goldman’s transcript.

What are Goldman’s three reasons to stay invested?

• Rates may stay on hold. Varadhan said he does not expect the Federal Reserve to raise interest rates in the latter part of 2026. His view differs from market concerns that persistent inflation could lead the Fed to resume tightening. Interest rates affect borrowing costs and spending decisions by households and businesses, according to the Federal Reserve.

• AI could become disinflationary. Varadhan said building the data centers and other infrastructure required for AI can initially strain resources and add to inflation pressure. Once that capacity is in place, however, he expects productivity improvements to work in the other direction by easing price pressures.

• Oil could fall below $70 a barrel. Varadhan expects crude to settle well below $70 per barrel, potentially lower, toward the end of 2026. Lower energy costs could provide another source of inflation relief, in his view.

Varadhan also pointed to what he called durable underlying nominal economic growth despite external shocks. If some of those pressures fade, he said the economy could keep expanding while gaining from AI-related productivity.

That assessment informs his view of credit markets as well. Varadhan said heavy issuance means investors should demand somewhat more compensation for risk, while economic strength has kept credit spreads from widening dramatically. He added that if external shocks recede and economic resilience continues, realized defaults could remain fairly low.

The outlook is a market view, not a confirmed outcome. Goldman said the episode reflects opinions as of publication that may change and may not represent the firm’s institutional position. The firm also said the material is informational and does not constitute investment advice or a recommendation to take a particular action.

This story draws on original reporting from CNBC.