Markets
Emerging-Market Stocks May Climb Higher Amid Boost from AI
EM equities have returned twice as much as the S&P 500 in the past 18 months. This remarkable performance is firmly rooted in fundamentals - solid earnings and EM companies’ exposure to key structural themes, says Katherine Bordlemay, co-head of Fundamental Equity Client Portfolio Management, Americas, in Goldman Sachs Asset Management. Looking forward, earnings are poised to continue providing stock price support, further boosted by strong investment flows into EM equity funds.
Transcript:
Katherine Bordlemay: Can emerging market equities maintain their momentum? Emerging markets have delivered standout performance over the past 18 months, more than doubling the return of the S&P 500.
What's driven the performance? One word: earnings. Across emerging markets, corporate earnings have been strong, and they're still accelerating. Earnings growth is expected to be 55% in 2026, more than double the S&P 500. Despite this, emerging markets still trade at more than a 40% discount to the US. But investors are catching on, pouring in nearly $50 billion this year, the most we've seen in two decades.
Importantly, emerging markets are dominant in the AI ecosystem. They’re responsible for nearly 80% of AI hardware exports, and as the AI trade continues to evolve, a more broad-based set of countries and companies could stand to benefit, in particular, those linked to the bottlenecks in the supply chain.
With AI exposure, attractive valuation, and strong earnings, emerging markets could continue to surge in the year ahead.
Recorded on July 8th, 2026.
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