Goldman Sachs warns that the artificial intelligence (AI)-driven stock market rally is creating a more concentrated trading environment for investors.
Goldman Sachs strategist Ben Snider says the AI-fueled rally that has helped the S&P 500 to repeat record highs also poses risks as market gains become increasingly tied to one dominant theme: reports Looking for Alpha.
The report says Goldman published an “insensitive portfolio” of stocks with positive earnings revisions but relatively low sensitivity to AI-related trading and changing expectations for economic growth.
The list includes pharmaceutical company Eli Lilly, social media giant Reddit, gold mining company Newmont, food processing company Archer-Daniels-Midland and Casey’s General Stores.
Goldman’s display comes as investors continue to focus heavily on companies tied to artificial intelligence, semiconductors and technology infrastructure.
The company says some sectors outside of AI trading have shown lower correlation with these themes, including consumer staples, healthcare and real estate.
According to the report, the current rally differs from previous valuation gains as earnings forecasts have also improved, especially for companies connected to AI infrastructure and energy. Outside these areas, however, earnings expectations were flatter.
Goldman says there is a risk that the market will increasingly behave like “one big trade,” with more stocks moving due to the same AI-driven factors.
The report says the bank’s insensitive portfolio is designed to identify stocks with positive earnings momentum that are less exposed to AI and macro growth sensitivity.
Follow us further X, Facebook And Telegram
Don’t miss a beat – Subscribe to receive email alerts straight to your inbox
Surf to the Daily Hodl mix
Generated image: Midjourney