The stock market is in choppy waters as the Iran war extends into its third week, but the shake-up is shedding light on some emerging opportunities, Goldman Sachs said.
In a note to clients on Friday, strategists at the bank pointed to the recent stock-market volatility stemming from the US-Iran war, and said they saw continued “downside risk” for the index going forward. That’s because valuations in the S&P 500 are already high, and there’s a risk that elevated oil prices could further pressure the market.
While the bank still expects the stock market to eventually continue its climb, strategists said saw the S&P 500 plummeting as much as 19% in the most severe oil price shock scenario in which crude rises to $150, dragging the index to 5,400.
The S&P 500 is down about 3% year to date, attesting to multiple risk-off events that have hit investors over the last several months, starting with the AI scare trade that sparked a broad rotation from tech.
“Higher oil and greater uncertainty cut short the cyclical economic acceleration underpinning many of our investment recommendations heading into 2026,” strategists said, adding that they were making several revised investment recommendations, given the more challenging environment for stocks at the moment.
Here are 3 areas of the market Goldman thinks investors should consider:
1. Materials & Healthcare
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Goldman said it now prefers secular growth stocks, which have long-term growth potential, over cyclical growth stocks, whose growth narratives are tied to the economy’s business cycle.
The bank recommended materials and healthcare sectors in particular, two areas that have lagged the broader S&P 500 in the past year. The materials sector of the index is up 15% in the last 12 months, while the healthcare sector is up 4%.
“The window of opportunity for cyclical trades predicated on a 1H 2026 economic acceleration is quickly closing,” Goldman said, adding that it was no longer recommending stocks with exposure to middle-income consumers or the nonresidential construction cycle.
2. Solar stocks
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Solar energy is another secular growth theme that could benefit in the coming years, Goldman said. Strategists pointed to strong energy demand expected from data centers through the end of the decade, alongside the recent spike in oil prices.
“Solar is likely to represent one source of that power, and the recent surge in oil and gas prices only adds to the case,” they wrote.
The Invesco Solar ETF is up 7% year to date, outperforming the S&P 500’s 3% loss for the year.
3. Cybersecurity stocks
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The strategists said they like cybersecurity stocks within the broader software sector, which has been hammered this year amid investor concerns about AI tools replacing many programs used by companies.
The iShares Expanded Tech-Software Sector ETF is down 17% since the start of the year, while the iShares Cybersecurity and Tech ETF is down just 5% over that period.
“Cybersecurity tends to be less volatile than the broader software industry during periods of market stress. In addition, some recent reports have indicated cybersecurity risks potentially stemming from the conflict in Iran,” the strategists said.
