Goldman Sachs updates the US Conviction List for July 2026: adds EL, NXT, and WFC; removes BRX, DUK, and NVT

Overview

This is the July 2026 monthly update of Goldman Sachs' US Conviction List - Directors' Cut. The report reviews the June US equity market, rates, inflation, AI capex, IPO supply, and expectations for the 2Q earnings season, and updates the list constituents by adding EL, NXT, and WFC, while removing BRX, DUK, and NVT. The report emphasizes that the list is not a portfolio and does not express macro, factor, or thematic positioning; rather, the investment review committee selects 20-25 high-conviction, differentiated ideas with attractive risk-adjusted returns from among fundamental Buy-rated stocks within Americas coverage.

Core views

The core view is that return dispersion in the US equity market is widening, improving the environment for active stock selection; the newly added stocks represent three bottom-up fundamental opportunities in consumer brand recovery, electrification platformization, and bank operating leverage, respectively. EL is viewed as a recovery name in premium beauty with re-accelerating revenue and margin expansion; NXT is viewed as a growth name benefiting from AI data center power demand and electrification trends, while extending from solar trackers into a higher-value-added platform business; WFC is viewed as a financial name with room for ROE/ROTCE improvement driven by balance sheet expansion, capital markets, and cost control.

Analysis framework

The report combines list updates, market environment commentary, historical performance review, list hit-rate analysis, fundamental metric screening, and in-depth single-stock summaries. At the market level, it focuses on return dispersion, rates and inflation, AI capex, IPO supply, and earnings expectations; at the list level, it compares stock performance versus the S&P 500, equal-weight S&P 500, GICS sectors, and Goldman Sachs Americas coverage; at the individual stock level, it emphasizes differentiated analyst views, valuation, catalysts, and risks.

Methodology notes

• Stock selection frameworkConviction List - Directors' Cut

  High-conviction buy list

  This list selects 20-25 stocks with the most differentiated views and the most attractive risk-adjusted return profiles from among Buy-rated stocks covered by Goldman Sachs Americas fundamental research, and is intended to be refreshed monthly.

• Performance evaluationHit rate

  Proportion outperforming the benchmark

  The report defines hit rate as the proportion of list stocks that outperform the specified benchmark during their inclusion period, with benchmarks including the S&P 500, equal-weight S&P 500, GICS sectors, and Goldman Sachs Americas coverage.

• Fundamental screeningTop 5 Snapshot

  Ranked by target price upside, EPS upside, revenue growth, and dividend yield

  The report presents the top five list stocks across four dimensions—target price upside, next-year consensus EPS upside, FY2 revenue growth, and current dividend yield—to illustrate that the opportunity set within the list is not one-dimensional.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Estee Lauder Co. (EL)

  Added to the US Conviction List

  Strengths

  Accelerating innovation cadence, progress in online and specialty retail channels, improvement in China and travel retail, and a cost-saving plan supporting margin expansion.

  Weaknesses

  The company has previously gone through years of execution challenges, and the market remains concerned about the pace of revenue recovery and its standalone growth capability.

  Comparison

  The report believes investors are underestimating its revenue inflection and valuation re-rating potential within the premium beauty innovation cycle.

  Risks

  Market share gains weaker than expected, revenue recovery slower than expected, and margin expansion slower than expected.

• Nextpower Inc (NXT)

  Added to the US Conviction List

  Strengths

  Expanding from solar trackers into an electrification technology platform, with backlog exceeding $5.25bn, while benefiting from AI data center power demand and the fastest, lowest-cost utility-scale solar solution.

  Weaknesses

  Historically sensitive to solar industry cycles and policy support, and the platform expansion depends on M&A integration and execution of product diversification.

  Comparison

  Relative to peers, the report believes NXT could achieve higher growth and a valuation premium through trackers, batteries, eBOS, software, and other value-added services.

  Risks

  M&A integration falling short of expectations, changes in solar demand or the policy environment, and a weaker-than-expected transition from trackers to a multi-product platform.

• Wells Fargo & Co. (WFC)

  Added to the US Conviction List

  Strengths

  Balance sheet expansion, a strong capital markets environment, improvement in the credit card business, and cost control together support operating leverage.

  Weaknesses

  Bank profitability remains affected by the macro economy, the yield curve, credit quality, and the regulatory environment.

  Comparison

  The report describes WFC as a bank shifting from defense to offense, targeting more than 300bp of margin expansion and 17.6% ROTCE by 2028.

  Risks

  A weakening US economy, lower capital markets activity, cost control falling short of expectations, or regulatory restrictions affecting expansion.

• Brixmor Property Group (BRX)

  Removed from the list this month but remains Buy-rated

  Strengths

  Its June return before removal was 3.2%, and LTD return relative to the S&P 500 was 12.7%.

  Weaknesses

  The committee determined that it is no longer one of the highest-priority investment ideas on the list.

  Comparison

  The report does not interpret the removal as a downgrade, but rather as a change in the list's opportunity cost and catalyst ranking.

  Risks

  Investors trading solely on list changes may misread the move as a formal rating change.

• Duke Energy (DUK)

  Removed from the list this month but remains Buy-rated

  Strengths

  June return was 3.1%.

  Weaknesses

  LTD return relative to the S&P 500 was -11.3%, and it also lagged relative to coverage and the sector.

  Comparison

  Reasons for removal may include price realization, catalysts having passed, a change in conviction, or the committee seeing better opportunities elsewhere.

  Risks

  Removal from the list does not mean a bearish fundamental view, but it may reduce short-term attention from list-driven capital.

• nVENT Electric (NVT)

  Removed from the list this month but remains Buy-rated

  Strengths

  LTD return relative to the S&P 500 was 38.3%, and relative to the equal-weight S&P 500 was 34.0%.

  Weaknesses

  After strong performance, there may be price realization or reduced relative attractiveness.

  Comparison

  The report discusses NVT together with the other removed names, emphasizing that removal does not necessarily imply a change in analyst rating.

  Risks

  Investors need to distinguish between list adjustments and formal rating changes to avoid over-interpretation.

Key data

• New additions this monthEL, NXT, WFCThe report explicitly adds Estee Lauder Co., Nextpower Inc, and Wells Fargo & Co. to the US Conviction List.
• Removals this monthBRX, DUK, NVTBrixmor Property Group, Duke Energy, and nVENT Electric were removed from the list, but the report states that these stocks remain Buy-rated.
• List hit rate: versus S&P 500June 2026 71%; TTM 49%; LTD 46%Hit rate is the proportion of included stocks that outperform the corresponding benchmark during their time on the list.
• List hit rate: versus equal-weight S&P 500June 2026 48%; TTM 47%; LTD 48%The report also uses the equal-weight index as a more balanced market benchmark.
• Overall list metricsMedian target price upside 25%; median FY2 KPI upside 3%; median FY2 revenue growth 9%; median beta 1.1These metrics are used to characterize the current list's overall fundamental and risk profile.
• NXT target price upside41%NXT appears among the top five in target price upside.
• NXT backlogMore than $5.25bnNXT reported record backlog in the March quarter, implying quarterly bookings above $1bn.
• NXT wallet share per 100MW projectApproximately $10mn increased to approximately $25mnThe report says NXT's wallet share in utility-scale solar projects has increased significantly over the past 1-2 years, excluding contributions from battery storage.
• EL margin expansion targetApproximately 450bp EBIT margin expansion from FY26-FY29This expansion is based on cost savings, productivity initiatives, and reinvestment.
• WFC long-term profitability target17.6% ROTCE in 2028The report believes the US economy, capital markets, the credit card business, and cost control will support the release of WFC's operating leverage.
• Upcoming earnings catalystsWFC July 14; NXT July 29; EL FQ4 expected mid-AugustThe report lists earnings-day implied volatility and notes that EL FQ4 may disclose market share, innovation pipeline, and the FY27 cadence.

Impact & implications

The implication for investors is that Goldman Sachs believes the current US market is better suited to generating alpha through bottom-up stock selection rather than relying on a single macro view or large-cap tech trade. The newly added directions show Goldman Sachs placing greater emphasis on fundamental inflection points, operating leverage, and platform expansion; at the same time, the report reminds readers that the list is not a portfolio, does not guarantee weighting or sector diversification, and that inclusion on the list is not a formal rating change.

Risks

• Persistently high interest rates and cost of capital may pressure valuation multiples, especially for long-duration growth stocks and assets tied to high capex.
• Although AI capex remains a core theme, investors need to assess returns on spending, the sustainability of growth, and the risk of a potential slowdown.
• The bar for the 2Q26 earnings season is relatively high, with S&P 500 consensus expecting 22% year-over-year growth; earnings disappointments could hurt sentiment.
• Increased IPO supply may create market absorption pressure, although the report believes it remains manageable relative to total US market capitalization.
• The list is not a portfolio and does not set weighting or diversification constraints, so it cannot replace portfolio risk management.
• Additions to or removals from the Conviction List do not represent formal rating changes, and investors may generate trading bias if they misunderstand the meaning of the list.

What to watch

• WFC's July 14 earnings report and roughly 6% implied earnings-day volatility in options.
• NXT's July 29 earnings report and current implied volatility of about 10%, with focus on orders, storage, electrification, and wallet share expansion.
• EL's FQ4 results in mid-August, with focus on market share, the innovation pipeline, and the FY27 cadence.
• During the next six weeks of the 2Q26 earnings season, the scale of corporate AI spending, where spending is concentrated, and evidence of investment returns.
• The impact of the US 10-year Treasury yield, PCE inflation, and FOMC commentary on the cost of capital.
• The balance between IPO supply and corporate buybacks, especially the approximately $1tn in corporate buyback plans mentioned for 2026.