Cruise lines have enjoyed smooth sailing in recent years, but a rising tide of ships could soon stir rough waters for investors.
In a note shared Monday, Goldman Sachs analyst Lizzie Dove said cruise sentiment “hasn't been this negative in a while” as plans of aggressive expansions risk backfiring.
Caribbean cruise capacity is set to surge sharply in 2026, and Goldman is sounding the alarm about what this means for pricing, demand, and ultimately, investor returns.
Cruise Lines Are Flooding The Caribbean—Will They Regret the Move?
The problem starts with one key stat: Caribbean market capacity is growing 9% year over year, to nearly 15.9 million passengers in 2026.
That might sound like good news at first. More ships, more passengers, right? Not quite.
This kind of rapid capacity expansion has a history—and not a good one.
In 2014, when the Caribbean saw a similar surge in capacity, pricing crumbled and didn't recover for a full year. Dove and her team point to that moment as a precedent—and say we could be in for a repeat.
"While we think it is far too soon to call for any big slowdown yet, we look to 2014 for precedent," Dove said, referring to what happened the last time cruise lines flooded the region.
Norwegian Cruise Is Going All-In On the Caribbean: Is That A Mistake?
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is taking the most aggressive leap into the Caribbean.
According to Goldman, the company is increasing its regional deployment from 30% to 40%, pushing its Caribbean berth count up 37% year over year—more than any other major cruise operator.
That may help them gain market share, but it's also squeezing profitability.
Goldman estimates that net per diem will drop 1% in the first quarter, and net yield growth will slow to 2.9% in 2026. That's a far cry from the high-growth outlook the company previously projected.
Dove now believes Norwegian investors will have to wait until the second half of 2026 to see any real payoff from this strategy. Until then, margins may stay under pressure.
"The mix shift impact is unique to NCLH," Dove said, and that uniqueness could prove costly—at least in the short term.
As a result, Goldman cut its price target for NCLH shares from $27 to $23 and lowered its valuation multiple to reflect the uncertain outlook.
Royal Caribbean And Carnival Are in Better Shape—For Now
Royal Caribbean (NYSE:RCL) isn't immune, but it's better positioned. Its Caribbean exposure remains flat at 57% of total deployment, and capacity is only rising 5.5%.
With strong demand for its megaships and private island CocoCay, Goldman sees some tailwinds that could cushion the impact.
Still, it wasn't enough to keep its stock untouched—Goldman lowered RCL's price target from $355 to $334.
Carnival Corp. (NYSE:CCL), on the other hand, could be the most insulated. It has no new ships coming online for 20 months, and its Caribbean exposure has only grown 22% since 2019, compared to 70% for the rest of the industry.
Its broader international footprint—48% non-U.S. passengers and 30% in Europe—also gives it greater flexibility to pivot if demand weakens in the Caribbean.
Goldman lowered CCL's target from $37 to $34, but Dove emphasized the company's resilience: "We believe CCL should be most resilient against a choppier Caribbean environment."
Bottom Line
Cruise lines are entering 2026 with a full throttle into the Caribbean, but demand might not keep up.
With over 2 million additional passenger cruise days (APCDs) flooding the region in the first quarter alone, the pricing picture could get messy—fast.
For investors, the message from Goldman is clear: watch the Caribbean market closely. This isn't just about tourism—it's about margins, market share, and whether aggressive expansion pays off or backfires.
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