Vanguard Projects Modest U.S. Stock Returns Despite AI Potential
Vanguard's 2026 outlook paints a tempered picture for U.S. equities, forecasting 4%-5% annualized returns over the next decade—a stark contrast to the S&P 500's historical double-digit gains. The report acknowledges AI's transformative potential but cautions that economic growth doesn't always translate to market outperformance.
While bullish scenarios envision AI driving 3% GDP growth between 2028-2035, bear cases warn of anemic growth mirroring the post-2008 era. The analysis underscores that megatrends like AI may reshape industries without necessarily boosting equity returns, particularly for large-cap stocks dominating current valuations.