So the AI trade finally hit a speed bump. Shocking, I know. After months of watching memory stocks and chip companies moon like they invented electricity, the whole momentum machine just… sputtered. China’s throwing its own AI hat in the ring, capex concerns are creeping in, and suddenly everyone’s asking the same question: “What now?”
Goldman Sachs has an answer, and it’s refreshingly boring—which, in a market this chaotic, is actually kind of genius.
Ben Snider and his team at Goldman just dropped a note saying the momentum factor has basically imploded. The stocks that were printing money three months ago are now getting absolutely hammered. Meanwhile, the equal-weight S&P 500 keeps hitting new highs, and correlations between stocks have tanked to levels we haven’t seen in decades. Translation: the market’s finally getting interesting again.
Here’s the thing: when everyone’s chasing the same trade, the smart move is to look sideways. Goldman flagged three areas worth paying attention to:
Consumer Experience Stocks are first up. Think casinos, cruise lines, hotels, resorts—basically anywhere people go to spend money on fun stuff. These companies are growing like weeds, they’re not getting disrupted by AI (good luck automating a Vegas weekend), and they’re trading at reasonable prices. Goldman’s consumer experience basket has been quietly crushing it while everyone else was obsessing over semiconductors.
Compounders are the second play. These are solid businesses with strong earnings growth, good returns on capital, and fat free cash flow. They’ve just been ignored because they’re not sexy enough. But here’s the kicker: they’re trading at historically cheap valuations compared to their fundamentals. It’s like finding a Ferrari in the clearance bin.
M&A Targets round out the trio. There’s been a surge in merger and acquisition activity, but most potential targets still aren’t priced for it. Goldman’s analysts have identified a basket of these companies that have already outperformed the broader market by 8 percentage points since Q1—yet valuations still don’t reflect the acquisition premium. That’s a gap waiting to close.
The real story here? The market’s finally rotating away from the “everything AI” narrative. Momentum is dead, volatility is through the roof, and investors are actually having to think again. For those willing to look beyond the hype, that’s not a problem—it’s an opportunity.
