So the AI trade is having a moment—and by “moment,” I mean it’s melting down faster than a server farm in July. Memory chips are tanking, competition from China is getting spicy, and suddenly everyone’s wondering: what now?
Enter Goldman Sachs, playing the role of the friend who actually knows where the exits are when the party gets weird.
The bank’s Ben Snider just dropped a note saying the momentum factor—basically the stocks that have been printing money all year—is now erasing those gains just as fast. The volatility is hitting record highs outside of recessions. Translation: things are getting choppy, and the AI darlings aren’t looking so darling anymore.
But here’s the thing: just because the hottest trade is cooling doesn’t mean the market’s dead. It just means it’s time to look elsewhere. And Goldman’s got three ideas that don’t require you to understand what a transformer neural network does.
First up: Consumer experience stocks. These are the boring-but-beautiful plays—casinos, hotels, cruise lines, entertainment venues. The kind of stuff people actually want to spend money on when they’re not obsessing over AI. Goldman’s data shows these have been crushing it, and they’re trading at reasonable valuations. Plus, there’s basically zero chance a robot is going to replace your vacation.
Second: Compounders. Fancy word for “really good companies that everyone forgot about.” These are businesses with strong earnings growth, solid balance sheets, and actual free cash flow. They’ve lagged the market lately, which means they’re trading cheap relative to their fundamentals. It’s like finding a quality stock on sale because everyone’s too distracted by the shiny AI stuff.
Third: M&A targets. Mergers and acquisitions are having a moment, and Goldman’s team thinks a bunch of potential targets are still underpriced. The logic is simple: if a company’s about to get bought, it’s probably worth more than what the market is currently paying for it. Shocking, I know.
What’s really interesting here is the bigger picture. The equal-weight S&P 500 is making new highs while the momentum factor is imploding. That means the market isn’t dying—it’s just rotating. The winners and losers are getting reshuffled, and correlations between stocks have dropped to their lowest level in decades. Translation: there’s opportunity everywhere if you know where to look.
Goldman’s basically saying: yeah, the AI trade is volatile and messy right now, but that doesn’t mean you should panic-sell everything and move to cash. It means it’s time to get creative. Look at the stuff that’s been left behind. Find the companies with real fundamentals. Consider the deals that might actually happen.
The market’s not broken. It’s just moving on to the next thing. And if you’re paying attention, that’s actually good news.
