Goldman's Wilson Backs US Megacap Tech, German Fiscal Trades

Goldman Sachs' Mark Wilson favours long US megacap technology and a basket of German fiscal spending beneficiaries, arguing that strong earnings growth and already-compressed valuations leave a constructive setup despite higher bond yields and energy prices. In an interview published by the bank on 13 October 2026, the head of European equities franchise sales and hedge fund coverage put US third-quarter earnings growth at around 27% and European second-half growth at about 22%, or 15% excluding energy companies. European stocks and 10-year Bund yields are roughly minus 70% correlated on a six-month basis.

Context — why this matters now

Investors have cut risk hard. Net exposure among US fundamental long-short hedge funds sits near the bottom of its one-year range and in the lowest few percent of its three- and five-year ranges, while global funds are in the bottom tenth of theirs. Wilson's argument rests on the gap between that defensive positioning and an earnings picture that is still expanding.

The macro backdrop explains the caution. Higher rates have driven a logical de-rating of equities on both sides of the Atlantic, Wilson said, with rate-sensitive sectors such as European renewables down by more than 20%. That is the mechanism behind the valuation compression he cites rather than a judgement on business quality.

What changed to make the setup interesting now is the combination of two forces. Earnings estimates for German fiscal beneficiaries have risen by around 13% to 14% this year, yet those stocks have de-rated by more than 20% and trade on low-teens multiples. Meanwhile hyperscaler revenue growth lags heavy capital spending by several quarters, and Wilson argues returns on that spending are beginning to come through.

Europe's energy exposure is the complication. Wilson said the region is more vulnerable than the US to the energy shock given greater inflationary pressure, and he described natural gas as as much of a concern as oil. Clients are watching gas inventories as winter approaches.

The correlation regime is the part Wilson calls a shift. European equities and 10-year Bund yields at around minus 70% on a six-month view is a degree of inverse correlation not seen since the 1990s, meaning an energy-driven inflation scare would hit stocks and bonds together rather than sending investors to one as a hedge against the other. That matters for how European equities behave in macro-driven markets.

Data — what the numbers show

The earnings figures are the anchor. Wilson expects US third-quarter growth of around 27%, which he called probably the peak for this cycle, and he noted UBS is at 28%. Goldman forecasts European earnings growth of about 22% in the second half, or 15% excluding energy companies.

The positioning numbers are the standout for traders. US fundamental long-short hedge fund net exposure sits near the bottom of its one-year range and in the lowest few percent of its three- and five-year ranges. Global funds sit in the bottom tenth of their ranges.

Metric	Wilson's figure
US Q3 earnings growth	~27% (UBS: 28%)
Europe H2 earnings growth	~22% (15% ex-energy)
Europe equities vs 10y Bund correlation	~-70% (6-month)
German fiscal basket EPS revisions	+13% to 14% YTD
German fiscal basket de-rating	>20%

Wilson rejected the view that Europe is a value trap. He acknowledged higher energy costs are a real competitive headwind showing up in company numbers, but said Europe already trades at a discount partly reflecting that, and has kept pace with the US this year. He pointed to rearmament, energy independence and industrials as investment themes, and said AI deployment could ease the drag from Europe's demographics. European banks, he noted, have outperformed the largest US tech stocks over one, three and four years.

Analysis — what it means for markets and sectors

The first trade is long US megacap tech. The thesis is timing on capital spending: hyperscaler revenue growth lags heavy capex by several quarters, and Wilson argues the returns on that spending are starting to appear. If that read is right, the earnings recovery arrives while valuations have already come down.

The second trade is long German fiscal spending beneficiaries. German manufacturing surveys are outpacing the US, earnings estimates for the group have risen by around 13% to 14% this year, and yet the stocks have de-rated by more than 20% to low-teens multiples. That combination of improving estimates and falling multiples is the whole case.

The clearest risk sits in Europe's energy bill. Because European equities and Bund yields are inversely linked to an unusual degree, an inflation scare driven by gas or oil would pressure stocks and bonds at the same time. Gas storage heading into winter therefore matters as much as the oil price for European equity holders.

France is the other live risk. The spread between French and German government bond yields has widened sharply over political tensions around the budget, and Wilson expects the issue to remain a feature of markets in the months ahead of the French presidential election in the first half of next year. A persistent spread has the potential to weigh on the euro and French banks.

Positioning cuts both ways. With hedge fund net exposure this depressed, a benign CPI print or a break in the Iran conflict could force investors back into stocks quickly and amplify any rally. European banks outperforming the largest US tech names over one, three and four years is the counter-argument to the megacap tech leg, and Wilson made it himself rather than dismissing it.

Outlook — what to watch next

Wilson flagged US CPI as the key input on whether yields can stop rising. A softer print would ease the pressure that has driven the de-rating of rate-sensitive sectors, and with positioning this light the reaction function is asymmetric.

He also sees a window for a break in the Iran conflict ahead of the US midterm elections. Oil and gas remain the swing factors for whether Europe's discount narrows, so European gas inventories into winter are a level to track alongside crude.

Third-quarter earnings will shape views on the AI trade specifically, testing whether hyperscaler spending is converting into revenue on the timeline Wilson describes. The French-German bond spread stays the barometer of euro-area political risk into next year's presidential election. No levels for these catalysts were disclosed.

Frequently Asked Questions

What does Mark Wilson's positioning call mean for retail investors?

It is a description of how institutional money is currently allocated, not a recommendation. Wilson's point is that hedge fund net exposure sits in the lowest few percent of its three- and five-year ranges, which he frames as a setup where good news could move prices further than usual. Retail investors should read it as context on crowding rather than a signal to copy.

Why is European gas storage important for European equities right now?

Wilson said Europe is more vulnerable than the US to the energy shock and that natural gas is as much of a concern as oil. Because European stocks and 10-year Bund yields are around minus 70% correlated, an energy-driven inflation scare would hit equities and bonds together. Gas inventories heading into winter are therefore a direct input into European equity risk.

What is the French-German bond spread telling investors?

The spread between French and German government bond yields has widened sharply over political tensions around the budget. Wilson expects it to remain a feature of markets in the months before the French presidential election in the first half of next year. It functions as a barometer of euro-area political risk and has the potential to weigh on the euro and French banks.

Bottom Line

Wilson's case rests on depressed hedge fund positioning meeting earnings growth that is slowing but still fast, with energy and French politics the two variables that could break it.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.