Published on: December 8, 2025, at 10:11h.
Updated on: December 8, 2025, at 10:11h.
- Goldman Sachs identifies two casino stocks as part of nearly 40 expected to recover in 2026, driven by a resurgence in middle-income consumers.
- The Las Vegas operators have faced significant hurdles this year.
- The banking giant anticipates a more stable macroeconomic environment benefiting consumer discretionary stocks.
This year has been challenging for investors of MGM Resorts International (NYSE: MGM), and the situation is even more pronounced for shareholders of Caesars Entertainment (NASDAQ: CZR). However, both casino stocks may see a revival in 2026, contingent on the rebound of middle-income consumers.
In a recent analysis, Goldman Sachs identifies 39 consumer discretionary stocks, including the prominent Las Vegas gaming companies, as likely to experience recovery tied to middle-income consumer engagement next year. While consumer sentiment among the middle class has often been bleak, the bank foresees opportunities for equity performance from businesses serving this demographic.
“We anticipate that stocks with ties to the middle-income consumer will continue to outperform in the upcoming months,” states Chief Equity Strategist Ben Snider.
Despite a challenging sentiment this year for major Las Vegas Strip operators, including MGM and Caesars, Goldman Sachs suggests that concerns regarding middle-income consumers may be overstated and that this demographic is on solid footing.
Macroeconomic Drivers Can Elevate Caesars and MGM in 2026
Key macroeconomic factors, including a more stable labor market, the benefits from President Trump’s One Big Beautiful Bill, and a potential easing of inflation, could pave the way for a more favorable outlook for middle-income consumers in 2026.
This hypothesis could soon be evaluated with the latest Federal Reserve meeting this week. Should the central bank decide to lower interest rates, it would signal confidence in inflation trends. Reduced borrowing costs would directly benefit debt-ridden Caesars and potentially catalyze further consolidation within the casino sector.
For investors eyeing middle-income-focused consumer cyclical stocks such as Caesars and MGM, current valuations appear appealing.
“The recent trajectory of valuations for this group has been closely linked to fluctuations in middle-income consumer sentiment. If tax refunds and job market stabilization enhance sentiment in this income group, we anticipate a rebound in stock valuations as well,” adds Goldman’s Snider.
However, the main risk for companies heavily dependent on middle-income consumers arises from the potential for significant downturns in the labor market. A surge in unemployment rates in 2026 could pose challenges for consumer-facing equities, including the mentioned casino operators.
Las Vegas Must Reinforce its Value Offering
Goldman Sachs did not delve deep into the details, but it noted that Caesars and MGM have faced challenges stemming from a perception that Las Vegas is losing its appeal as an affordable destination for middle-income visitors.
Numerous reports, both in social and mainstream media, highlighting exorbitant prices—such as $26 for bottled water, $12 for coffee at lower-tier Strip casinos, and hefty room service fees—have created an impression that Las Vegas is becoming too pricey. Additional fees for parking and resorts, along with steep minimum bets at many Strip venues, have compounded this perception.
In conclusion, Caesars and MGM have significant work ahead if they intend to leverage a potential rebound among middle-income consumers in 2026 for their investors.