Exchanges From Assets to Alpha: David Kostin on US Equities
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Dec 4, 2025 
David Kostin, the Chief U.S. equity strategist at Goldman Sachs, brings decades of insight on the current equity market's volatility and the implications of the AI trade. He highlights the nervousness among investors contrasted with stabilizing earnings. Kostin discusses potential bubbles in private markets, the performance struggles of fund managers, and where smart money is currently positioning itself. He also muses on his long career and shares memorable encounters with legendary investors like George Soros and Warren Buffett.
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Volatility Aligned With Recent Years
- Market volatility in 2025 has been roughly in line with the last five years, with the VIX around 19 and recently a bit lower.
- Strong earnings, including a broad 9% year-over-year rise, helped stabilize markets after the April sell-off.
Public Vs. Private AI Markets
- Public markets show price growth roughly matched by earnings for top AI beneficiaries like NVIDIA, reducing bubble risk there.
- Private-market capital appears overheated with reflexive funding dynamics that may be unsustainable.
Reflexivity Drives Private Valuations
- Reflexivity (price driving growth expectations then valuations) amplifies private-market AI valuations as long as fresh capital flows in.
- That circular dynamic can reverse abruptly when growth expectations or funding dries up.
