Goldman Sachs flags three non-AI stock themes amid market volatility

As volatility grips the AI infrastructure trade, Goldman Sachs Research is calling attention to three investment themes with minimal correlation to AI stocks. Chief US Equity Strategist Ben Snider acknowledges that while fundamentals remain solid, extreme volatility is creating a vicious cycle of portfolio reductions that threatens to derail the momentum trade.

Snider notes that a fundamental catalyst would be the strongest foundation for the trade to regain footing. However, strategists expect relatively modest revisions to capital expenditure estimates for hyperscalers' AI infrastructure spending, observing that it is probably too early for companies to provide guidance on 2027 spending plans. That said, strong revenue results for hyperscalers demonstrating an "attractive" return on AI investment could signal that capex spending will remain elevated. "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. He adds that investor conversations have increasingly focused on the difficulty of finding opportunities unrelated to AI, with most sectors now trading with a strong positive or negative correlation to AI and momentum.

One of the three strategies Goldman Sachs identifies is consumer-experience stocks, which offer exposure to strong, sustained secular growth in consumer spending on experiences. These equities trade at undemanding valuations and face limited risk from AI disruption. However, Snider flags a key risk: a weakening in consumer health, including from higher oil prices or a deteriorating labor market, could undermine the trade.

The AI infrastructure trade has delivered substantial returns, but extreme volatility is now creating operational challenges for portfolio managers. Chief US Equity Strategist Ben Snider identifies a vicious cycle: the volatility encourages investors to reduce positions, which in turn amplifies further volatility. While the fundamental case for AI spending remains intact—hyperscalers continue to invest heavily in infrastructure—the timing of near-term guidance is a constraint. Strategists expect only modest revisions to capital expenditure estimates and note that it is probably too early for companies to provide 2027 spending plans, removing a potential near-term catalyst.

This environment has pushed investors to seek alternatives. Many fund managers report that a majority of sectors now trade with strong positive or negative correlation to AI and momentum, leaving few places to hide. Goldman Sachs Research addresses this challenge by surfacing investment ideas uncorrelated to AI stocks. Consumer-experience stocks are highlighted as one such opportunity, combining secular growth in consumer spending on experiences with undemanding valuations and limited exposure to AI disruption risk. The trade's main vulnerability remains macroeconomic: a deterioration in consumer health—whether from rising oil prices or labor market weakness—could undermine the thesis.

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