US Market Pulse, May 2026: AI, Energy and Latin America at the Core of Goldman Sachs Asset Management Outlook

A resilient global economy, easing Middle East tensions, and an emerging markets earnings boom driven by artificial intelligence define the investment landscape, according to Goldman Sachs Asset Management’s latest Market Pulse. For Latin America, the convergence of commodity exports, nearshoring, and semiconductor supply chain dynamics creates a distinct opportunity set.

The global macro narrative entering mid-2026 is neither a recession scare nor a runaway boom. Instead, it is a story of structural transformation—where artificial intelligence reshapes production, energy markets remain structurally tight, and emerging economies supply the physical backbone of the digital revolution. Goldman Sachs Asset Management’s May 2026 Market Pulse report presents a nuanced outlook: the US grows at 2.3%, Europe remains fragile, and emerging markets expand at 3.6%, led by China’s 4.7% GDP trajectory. For investors, the critical insight lies in identifying which regions and sectors serve as the “picks and shovels” of the AI era.

[IMAGE: Global map with GDP growth arrows and AI chip icons overlaying semiconductor production hubs in East Asia, India, and Latin America]

Global Resilience: The Macro Axis of AI and Energy

Goldman Sachs Global Investment Research projects US core inflation easing to 2.5% by year-end 2026, creating room for the Federal Reserve to cut rates later this year. This “soft landing” scenario, however, relies on a delicate balance: energy prices must not re-ignite inflation, and AI-driven productivity gains must continue to lift corporate margins.

One of the most significant developments in the first half of 2026 is the gradual resolution of the Middle East conflict. While the reduction in geopolitical headline risk is welcome, physical oil markets remain unusually tight. Oil-on-water inventories have dropped to all-time lows, leaving the market vulnerable to any supply disruption. The Goldman Sachs oil price forecast places Brent crude in the $80–$90 per barrel range through the remainder of the year, with upside risks if demand accelerates.

“The macro axis today is defined by two forces: artificial intelligence as a long-term structural driver, and energy as a persistent source of inflation and supply-chain risk,” the report states. “Emerging market economies, which account for roughly two-thirds of global semiconductor production, are not just beneficiaries of AI—they are indispensable suppliers. This ‘picks and shovels’ role is what makes EM exposure so compelling in 2026.”

[IMAGE: Chart comparing the MSCI EM forward P/E ratio (12x) against the 10-year average with an overlay of AI-related capex growth projections]

US Economy: Net Energy Exporter Masks Risks

The US economy enters mid-2026 on relatively solid footing. GDP growth of 2.3% and core inflation at 2.5% provide a macroeconomic backdrop that is neither too hot nor too cold. The Goldman Sachs Market Pulse emphasizes that the US is better positioned than most developed markets to absorb energy shocks, thanks to its status as a net energy exporter.

However, equity markets have experienced bouts of volatility since March, driven by uncertainty around tariff policy and the pace of AI monetization. Earnings expectations, nonetheless, have been revised higher since January. The report highlights that AI investment and productivity gains are long-term trends that should continue to support margins, even as short-term noise creates entry points.

“For investors concerned about volatility, equity income and dividend strategies may offer a smoother ride,” the report notes. “The focus should remain on future earnings power rather than transient market dislocations.”

[IMAGE: Chart of S&P 500 forward P/E and consensus EPS revisions overlay with a net energy export indicator]

Euro Area: Fragile but Less Severe than 2022

Europe remains the weakest link in the developed market complex. The euro area is forecast to grow just 0.7% in 2026, making it highly vulnerable to any further energy price spikes. While the current shock is smaller than the 2022 crisis, the structural vulnerabilities—dependence on imported energy, a manufacturing slowdown, and political fragmentation—persist.

The European Central Bank is expected to hike rates in June and September 2026 to contain energy-driven inflation, before reversing course and cutting back to 2% in 2027. This differentiated policy path, compared to the Fed, creates currency and bond market implications. Government bond markets are increasingly attuned to energy-induced inflation, making central bank communication a critical variable.

“The ECB’s dilemma is that it must tighten into a weakening economy,” the report explains. “This is why ECB rate hikes are likely to be front-loaded and short-lived. Investors should be prepared for a policy reversal in 2027.”

[IMAGE: Line graph comparing ECB and Fed policy rate paths with Brent crude price overlay]

Emerging Markets: AI-Driven Earnings Boom

The most striking finding in the May 2026 Market Pulse is the strength of emerging market equities. EM GDP growth is forecast at 3.6%, led by China at 4.7%, India at 6.5%, and select Latin American economies benefiting from commodity demand and nearshoring.

Valuations remain attractive. The MSCI EM 12-month forward P/E of 12x is below the 10-year average, offering a significant discount to developed markets. More importantly, the earnings story is shifting. AI-related demand now contributes nearly 70% to Goldman Sachs’ EPS growth forecast for EM in 2026.

The semiconductor supply chain is the clearest example. South Korean semiconductor exports surged from $20 billion in December 2025 to $30 billion in March 2026—a 50% increase in just three months. This growth is not limited to East Asia. Emerging markets AI investment is expanding into assembly, testing, and packaging facilities in Malaysia, Vietnam, and parts of Latin America.

Alpha generation has been strong. According to the report, 92% of active EM managers beat their benchmark through Q1 2026, suggesting that stock selection is paying off in a market where differentiation matters.

[IMAGE: Bar chart showing GDP growth forecasts for select EM economies with an inset highlighting semiconductor export growth from South Korea]

Latin America: Commodity Exporters and the AI Supply Chain

For Latin America investment, the May 2026 outlook presents a convergence of three themes: commodity exports tied to energy transition, nearshoring manufacturing momentum, and emerging roles in the semiconductor supply chain.

Countries like Brazil, Chile, and Peru are major producers of copper, lithium, and rare earth minerals—all critical inputs for AI data centers, electric vehicles, and renewable energy infrastructure. As the US seeks to diversify critical mineral supply chains away from dominant producers, Latin America stands to gain.

Nearshoring, or the relocation of manufacturing closer to the US market, has accelerated since 2023. Mexico has become the top trading partner of the United States, and its manufacturing sector is expanding beyond automotive into electronics and semiconductor assembly. The report notes that several Mexican states are now competing with Southeast Asian hubs for new chip packaging facilities.

“Latin America is often overlooked in the AI narrative, but the region provides the physical inputs that make AI possible,” the report states. “Copper for data center wiring, lithium for batteries, and nearshoring capacity for supply chain resilience—these are the ‘picks and shovels’ of the 21st century.”

[IMAGE: Map of Latin America highlighting mineral resource deposits, nearshoring corridors in northern Mexico, and semiconductor assembly zones]

Oil Markets and the Energy-Inflation Dynamic

The energy complex remains the most volatile variable in the macro equation. The physical tightness in oil markets is structural: years of underinvestment in upstream capacity, combined with rising demand from AI data centers and transportation, have created a supply-demand imbalance that is not easily resolved.

Goldman Sachs’ oil price forecast of Brent in the $80s or $90s reflects a market that is fundamentally tight but not yet in crisis. The resolution of the Middle East conflict removes some risk premium, but it does not add barrels to the market. The report warns that any supply disruption—whether from weather events, geopolitical flashpoints, or production outages—could push prices significantly higher.

For investors, the energy-inflation dynamic means that sector allocation matters. Energy equities offer both earnings momentum and a hedge against inflation surprises. However, the report cautions against assuming that high oil prices automatically translate into strong equity returns, as cost inflation and energy transition risks also weigh on the sector.

[IMAGE: Graph tracking Brent crude oil inventory levels (oil-on-water) against the 5-year average]

Investment Implications: Positioning for the AI-Energy Axis

The Goldman Sachs Market Pulse concludes with several actionable insights for portfolio construction:

First, within developed markets, favor the US over Europe. The Fed’s capacity to cut rates later in 2026 provides support for growth stocks, particularly those exposed to AI productivity gains. In Europe, focus on defensive sectors and companies with pricing power that can pass through energy costs.

Second, maintain a strategic overweight to emerging markets. The combination of low valuations, AI-driven earnings growth, and a supportive USD environment (if the Fed cuts) creates a favorable backdrop. Active management remains critical, given the dispersion in EM performance.

Third, consider Latin America as a distinct allocation within EM. The region’s commodity export base aligns with both AI infrastructure demand and energy transition trends. Nearshoring provides an additional growth driver that is less correlated with Chinese demand.

Fourth, energy exposure should be tactical rather than strategic. Oil prices are likely to remain elevated, but the sector faces long-term headwinds from energy transition policies. Short-term overweight positions, particularly in companies with strong free cash flow and shareholder returns, may be appropriate.

[IMAGE: A futuristic split-screen composition: left side shows a glowing digital network map of the Americas with AI chip icons and data streams, right side depicts oil rigs and renewable energy turbines over a sunset horizon]

Looking Ahead: A Market of Structural Shifts

The May 2026 US macro outlook 2026 is not a story of cyclical recovery or impending recession. It is a story of structural transformation—where artificial intelligence, energy security, and supply chain realignment create winners and losers across regions and sectors.

For investors navigating this environment, the key is to distinguish between short-term noise and long-term trends. The resolution of the Middle East conflict removes a source of uncertainty, but it does not change the underlying tightness in energy markets. AI earnings are real, but they are concentrated in companies and countries that supply the infrastructure.

Latin America, often peripheral in global investment debates, is emerging as a critical link in the AI-energy axis. Commodity exports, nearshoring capacity, and growing participation in the semiconductor supply chain make the region a unique opportunity within the broader EM story.

As the Goldman Sachs Market Pulse makes clear, the global economy in May 2026 is resilient but not without risks. The path forward requires investors to look beyond headline narratives and focus on the underlying structural dynamics that will shape returns for years to come.