Three New Stock Themes Are in Focus as the AI Trade Gyrates

While the fundamentals may be solid, there could be more near-term challenges for the momentum trade for AI infrastructure stocks, Chief US Equity Strategist Ben Snider writes in a report. Extreme volatility encourages further reductions in portfolio positions, creating a vicious cycle.

A fundamental catalyst would be the strongest reason for the trade to regain its footing. However, our strategists expect relatively modest revisions to estimates for hyperscalers’ capital expenditures on AI infrastructure, noting that it is probably too early for companies to give guidance on their 2027 spending plans. That said, strong revenue results for hyperscalers that signal an “attractive” return on AI investment could suggest that capex spending will be higher for longer, Snider notes.

“While many fund managers have maintained a bullish fundamental view on the AI infrastructure complex, recent volatility has made it challenging to maintain that view in portfolios,” Snider writes. “Our conversations with investors have also focused on the challenge of finding investment opportunities not tied to AI, with many sectors trading with a strong positive or negative correlation to AI and momentum in recent months.”

What are some investment strategies unrelated to AI stocks?

Goldman Sachs Research identifies three investment ideas that are unrelated to AI and have minimal correlation to those stocks:

Consumer-experience stocks offer exposure to strong, sustained secular growth in consumer spending on experiences. These equities trade at undemanding valuations and have limited risk from AI disruption. “A key risk to the trade is a weakening in the health of the consumer, including via higher oil prices or a weakening labor market,” Snider notes.

Stocks that Goldman Sachs Research describes as “compounders” have strong earnings growth, returns on capital, balance sheets, and free cash flow conversion but have recently lagged behind. They now trade at a historically large valuation discount. The median compounder stock has grown earnings per share more than twice as fast as the median S&P 500 stock during the past three years, and the consensus of analyst estimates is for the group to maintain its superiority in earnings growth in coming years.

M&A candidates, identified by equity analysts in Goldman Sachs Research, are stocks that do not appear to have priced in the ongoing surge in M&A activity. The volume of announced US M&A has risen 32% to $1.2 trillion in 2026 (year over year, as of July 17). A group of potential M&A candidates identified by Goldman Sachs Research equity analysts has outperformed sharply in recent weeks. “We expect deal activity will remain strong in coming months,” Snider adds.

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