What to Buy After AI Stock Rally Cools? Goldman Names '3 Major' Investment Directions

As the rally in artificial intelligence (AI)-related stocks this year has recently shown a clear slowdown, market capital is beginning to seek new safe havens. In a recent report, Ben Snider, an analyst at Goldman Sachs (GS-US), pointed out that investors looking to avoid the high volatility risks associated with AI themes can focus on three investment themes that have extremely low correlation with AI.

According to Business Insider, AI-related stocks have been the primary engine driving the broader market since 2026, but this momentum has recently begun to lose steam. Weak performance in memory chips and the broader semiconductor sector, rising concerns over capital expenditures, and competitive pressure from Chinese firms catching up rapidly have brought the previously strong momentum trading strategy to a near standstill.

Goldman Sachs stated in its recent report that the 'momentum factor' has sharply declined, completely erasing gains since late April, with its volatility climbing to the highest level on record for non-recession periods.

The firm also noted that while the equal-weighted S&P 500 Index continues to hit new historical highs, the correlation among S&P 500 components has dropped to the lowest level in decades.

In response to this volatility in AI-related stocks, Snider sees an opportunity to adjust investment strategies and has identified three AI-unrelated investment themes that show very low correlation with Goldman's tracked AI stock portfolio and the momentum factor. These include:

Consumer Experience Stocks

Goldman指出 that consumer experience stocks offer exposure to the long-term structural growth of consumer spending on experiential consumption at relatively modest valuations, with limited risk of disruption from AI.

Other research firms have also expressed optimism toward consumer experience stocks. Citrini Research has listed this sector as one of the top picks amid market reshuffling.

Snider noted that Goldman's tracked basket of consumer experience stocks has performed strongly recently, with components including entertainment facilities, casinos, hotels, resorts, and cruise line companies.

Compounder Growth Stocks

According to Goldman, compounder growth stocks exhibit strong earnings growth, high return on invested capital, solid balance sheets, and excellent free cash flow conversion, yet have underperformed recently and are currently trading at historically significant valuation discounts.

Analysts also believe compounder stocks hold substantial investment potential. These companies possess strong fundamentals but remain overlooked by Wall Street, consistently lagging behind broader market gains.

However, Goldman sees this as an opportunity for investors to acquire high-quality businesses at lower valuations.

M&A Candidate Stocks

M&A candidate stocks are those screened by Goldman's equity analysts, and the market appears not to have fully priced in the ongoing surge in merger and acquisition activity.

Goldman noted that M&A activity has remained robust recently, and its team believes this could significantly increase the value of target companies. Nevertheless, the team still believes most of these companies remain undervalued.

Snider stated: 'A group of stocks identified by Goldman's equity analysts as potential M&A targets has outperformed the equal-weighted S&P 1500 Index by 8 percentage points since the end of the first quarter. Yet despite increasing M&A activity, their valuations have not reflected above-average acquisition premiums.'

In fact, this is not the first time Goldman has recommended non-AI-related alternatives to investors during market rotations. Previously, the firm also promoted the so-called 'HALO trade' strategy, highlighting traditional defensive sectors such as utilities, energy, and telecommunications.