After a year of extended rallies, global stocks may be in for a harsh new reality.
According to some Wall Street chief executives, markets could be heading toward a correction.
“It’s likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months,” Goldman Sachs CEO David Solomon told investors at the Financial Leaders’ Investment Summit in Hong Kong. “Things run, and then they pull back so people can reassess.”
He added that drawdowns of 10 to 15% happen often, even during positive cycles, and it’s not something that should affect your “fundamental” or “structural” belief about how you choose to allocate capital.
Equities have hit fresh highs in 2025 after crashing in April following the announcement of President Donald Trump‘s “Liberation Day” tariffs. The run has been driven by enthusiasm for AI and expectations of continuing rate cuts from the Federal Reserve.
Major tech firms like Apple and Nvidia have surged to new highs in recent weeks, with iPhone maker Apple reaching a $4 trillion valuation last week and Nvidia reaching $5 trillion, becoming the first company ever to do so.
Ted Pick, CEO at Morgan Stanley, said that while stocks seem expensive, the “systematic risk has probably narrowed.”
“We should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect,” he said, referring to this as a “healthy development.”
Analysts have expressed concerns that equities are overvalued as markets continue to reach new records.
Mike Gitlin, president and CEO at Capital Group, said valuations are “challenging” while earnings have been strong.
He said are “somewhere between fair and full, but I don’t think a lot of people would say we’re between cheap and fair.”