Caesars, MGM to Benefit from 2026 Middle-Income Rebound, Says Goldman Sachs
Posted on: December 8, 2025, 10:11h.
Last updated on: December 8, 2025, 10:27h.
- Two casino stocks are among nearly 40 stocks Goldman Sachs sees rebounding in 2026 as middle-income consumers bounce back
- The Las Vegas duo have struggled this year
- Bank sees steadier macroeconomic backdrop supporting consumer cyclical names
It’s been a disappointing year for MGM Resorts International (NYSE: MGM) investors, and that scenario is amplified by many multitudes for shareholders of Caesars Entertainment (NASDAQ: CZR), but the two casino stocks could bounce back in 2026 if middle-income consumers do the same.
In a new report, Goldman Sachs highlights 39 consumer discretionary equities, including the two Las Vegas gaming giants, as among the names with exposure to middle-income consumers that could be poised to bounce back next year. While much has been made about dour consumer sentiment among the middle class, the bank sees a path to equity out-performance by companies catering to this cohort.
We expect that stocks with exposure to the middle income consumer will continue to outperform in coming months,” notes Chief Equity Strategist Ben Snider.
Somber sentiment has been a clear challenge for Las Vegas Strip operators, of which MGM and Caesars are the two largest, this year, but the struggles of middle-income consumers may be overblown, and the demographic is on firm ground, according to Goldman Sachs.
Macroeconomic Factors Could Lift Caesars, MGM in 2026
Macroeconomic factors such as a steadier labor market, tax benefits derived from President Trump’s One Big Beautiful Bill, and the possibility of cooling inflation could support a brighter outlook for middle-income consumers in 2026.
That thesis could be tested as soon as this week with the latest Federal Reserve meeting. If the central bank lowers interest rates as hoped, it would signal it’s comfortable with inflation’s trajectory. Lower borrowing costs would be a direct benefit to debt-laden Caesars and potentially open the door to more casino industry consolidation.
A positive for investors considering positions in middle-income-exposed consumer cyclical stocks, including Caesars and MGM, is that valuations on the group are undemanding.
“The recent trajectory of valuations for the group has been closely tied to changes in middle-income consumer sentiment. To the extent that tax refunds and labor market stabilization improve sentiment among this income cohort, the valuations of middle-income consumer stocks should rebound as well,” adds Goldman’s Snider.
The bank points out that the primary risk to companies with heavy middle-income exposure is the specter of material cooling in the labor market. If unemployment were to shoot higher in 2026, consumer-facing equities, including the two casino operators mentioned here, could be vulnerable.
Las Vegas Needs to Reinforce Value Proposition
Goldman Sachs didn’t get into the weeds on the issue, but Caesars and MGM have been hurt by perceptions that Las Vegas is no longer a credible destination for middle-income consumers looking for good value.
A consistent spate of social and traditional media reports on $26 bottles of water in Strip rooms, $12 cups of coffee at lower-tier Strip casino hotels, and three-figure room service charges for eggs and pancakes has many would-be visitors claiming that Sin City is too expensive. Not to mention the slew of fees (parking, resort, etc.) and high table-game minimums found at many Strip properties.
That’s to say Caesars and MGM have some work to do if their investors are to capitalize on a potential 2026 middle-income consumer rebound.
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