Goldman Sachs's CEO says he 'sleeps very well' over the bull market, but a pullback is coming

By Barbara Kollmeyer

David Solomon says the U.S. economy is in decent shape

Goldman Sachs CEO David Solomon says the stock market isn't worrying him right now, but eventually there will be a reckoning over AI technology.

Goldman Sachs Chief Executive Officer David Solomon says the ongoing bull market is not keeping him up at night, but he also expects a pullback within a couple of years.

"I sleep very well and am not going to bed every night worried about what will happen next," he told Bloomberg TV Friday, while hitting on markets, AI and the economy. "I think the opportunities are great. I think they're very exciting, but I also see complacency around risk-taking, and when that happens ultimately there'll be some speed bumps and drawdowns."

The nearly three-year rally for stocks, which was briefly disrupted in April, has been driven by investors' enthusiasm over AI technology and related tech companies. But Wall Street observers are increasingly questioning whether the spending on that technology will bear fruit. The S&P 500 SPX and the Nasdaq composite COMP have each logged 30 record closes this year as of Thursday.

Need to Know: The AI bubble is 17 times the size of the dot-com frenzy - and four times subprime, this analyst argues

"Markets run in cycles and whenever we've had a significant acceleration in a new technology that creates a lot of capital formation, and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential," said Solomon.

"I wouldn't be surprised if in the next 12 to 24 months we see a drawdown with respect to equity markets. But that shouldn't be surprising given the run we've had," he added.

The CEO predicted there will be "winners and losers" around AI technology, similar to what was seen in the dot-com era. "Many companies went away, [and] Amazon became an incredible company. You're going to see a similar phenomenon here," he said.

And while there were similar conversations in 1998 around internet technology, the environment continued another three years before there was a "significant check on that" in 2001 and 2002, he noted.

As for questions around AI capital spending, Solomon said some investment probably won't see a return - just as in any super tech or big investment cycle pattern of the past. "It's not different this time. We just don't know how it will play out. But it's very exciting to see these technologies get deployed and the impact that's going to have," he said.

Solomon also said that the U.S. economy is in decent shape and that he expects more momentum in the next year, though the labor market and inflation also bear watching.

Read: These AI 'loser' stocks were left for dead. Now it might be their turn to rally.

-Barbara Kollmeyer

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10-03-25 0930ET