Goldman Sachs predicts that the US will maintain its exceptionalism in stocks despite the S&P 500's underperformance this year. The firm explains that American companies' higher investment in research and development (R&D) contributes to long-term growth. US businesses lead in return on investment, fostering long-term innovation.

Goldman Sachs emphasizes that the US is likely to uphold its exceptionalism, although international stocks have outperformed the S&P 500 this year. American companies stand out due to their high returns on investment in R&D and other growth-focused areas. By investing significantly in research and development, US firms set the stage for significant future growth.

David Kostin of Goldman Sachs highlights that S&P 500 companies allocate almost double the amount for growth investment compared to global equity markets. This substantial investment in research and development promises substantial growth in the future.

Kostin uses the growth investment ratio, calculated by adding growth capital expenditures and R&D costs as a proportion of cash flow from operations, to show the difference between US and international companies. US-based firms also achieve a higher return on investment (80%) compared to international peers (73%), demonstrating their efficient utilization of resources.

The American exceptionalism trade relies on continued high levels of growth investment and returns on investments. The US leads in major industries and innovative technologies such as AI, quantum computing, and biotech research.

Goldman Sachs' perspective contrasts with concerns from other financial institutions regarding the impact of uncertain trade policies under President Donald Trump. While Citi strategists advise profit-taking in US stocks and increasing exposure to Chinese stocks, Morgan Stanley suggests a potential resurgence of US tech stocks leading to renewed US market dominance.