US Midterms Could Shift Stocks to Healthcare

Goldman Sachs sees healthcare as next AI investment

Goldman Sachs believes healthcare could emerge as the next investment opportunity in the AI trade as investors look beyond data centres, chips and networking stocks.

“i think the next leg of the ai trade is actually healthcare”

US midterms may accelerate stock market shift

The US midterm elections could give fresh momentum to a shift already underway in the stock market, with healthcare emerging as a potential investment opportunity in the next phase of the artificial intelligence trade.

Healthcare offers defensive characteristics

Lou Miller, global head of Custom Basket Trading at Goldman Sachs FICC and Equities, believes healthcare could offer investors a combination of defensive characteristics and the potential for faster earnings growth.

AI infrastructure stocks declined sharply

According to figures cited by Miller, data centre stocks fell 36%, memory stocks 42%, optical networking stocks 46%, and neocloud stocks 57% from their respective market highs earlier in 2026.

Healthcare adoption of AI growing

Healthcare companies are increasingly adopting ai in areas such as medical tools and diagnostics, potentially creating opportunities for businesses that apply the technology rather than develop the underlying models.

Healthcare as defensive sector

Miller sees healthcare as a potentially defensive sector because of its historically limited correlation with ai-related stocks, making it attractive for investors seeking earnings growth and market volatility protection.

Cyclical and secular factors in healthcare

Cyclical factors are linked to shorter-term economic changes, while secular factors refer to longer-term trends that could provide healthcare with sustained growth through ai adoption.

Healthcare earnings growth potential

Goldman Sachs expects healthcare to record accelerating earnings growth next year, combining potential earnings improvement with defensive characteristics for investors.

Consumer staples not automatically defensive

Miller cautioned that expensive defensives like consumer staples may not be defensive, as their earnings yield is half the yield on high-yield bonds and dividend yield is half the yield on the 10-year us treasury.

Investors should watch key indicators

Investors should monitor employment data, inflation, geopolitical developments, corporate earnings announcements, and the us federal reserve’s december 9 policy decision for market trends.

Healthcare as next phase of ai investment

The next phase of ai investment could shift from infrastructure providers to businesses using ai to improve operations, products and services, with healthcare as a key beneficiary.