Goldman Sachs says a key investment theme is reviving as the market stages a comeback.
In a new episode of the bank’s Exchanges podcast, Dominic Wilson, senior market advisor at Goldman Sachs Research, says say that artificial intelligence (AI) stocks are coming back into favor.
“What we’ve seen is that the AI theme, not just in terms of conversation, but in terms of what the markets are actually doing, has come back very, very quickly. Semiconductor stocks… [are] it’s going very well.
Even in this recovery period, we have had more pressure on software stocks. You made semiconductors reach new heights… And so that theme is back.”
However, Wilson warns that investors should expect market volatility in the short term and advises them to react alertly.
“You should have selective long-term risk in the things you like, and you should be hedged quite aggressively, because there are these downside risks that are still very prominent and could easily throw things off…
If you’re relatively well hedged as the market moves lower, you should start thinking about adding some risk at lower prices to the things you like. And as you move up, the market relaxes… you should start thinking about whether you need to replenish your hedges more aggressively.”
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