Goldman Sachs Exec Remains Bullish on Two Trades Amid Geopolitical Turbulence

A senior executive at Goldman Sachs says markets remain resilient despite elevated volatility and geopolitical uncertainty.

On Goldman Sachs’ “The Markets” podcast, John Storey, co-head of equities distribution, describes the current environment as “fragile,” with investors heavily hedged and volatility near extreme levels.

Despite this, Storey is surprised at how well equities have held up and remains bullish on a number of sectors.

“When I was here last June, I pressed the European financials theme. It’s been incredibly resilient during this period. It’s still high single-digit PEs. It’s double-digit earnings growth. Double-digit shareholder returns. And still going through earnings upgrades.

So, I like that theme a lot. And then I think the second theme which we just talked about is this shift from asset-light to asset-heavy in the sectors we talked about. So, data center, defense, mining, materials, you know, all the equipment spend is just a great place to be.”

Storey highlights the ongoing rotation from asset-light to asset-heavy sectors, particularly those tied to infrastructure and physical capital, as investors reassess the long-term impact of artificial intelligence on business models.

He also reiterates confidence in the “picks and shovels” approach to (AI) investing.

“I think the picks and shovels trade around AI has worked incredibly well. The capex spend, as we keep revising up our number, or corporates keep revising up their number on capex spend, is playing through in the markets. So, how can you not be long the likes of the picks and shovels, semiconductors, et cetera.”

Storey adds that while AI-driven productivity gains are widely anticipated, the earnings impact remains less clear, reinforcing the appeal of companies supplying the infrastructure behind the technology rather than its end applications.

Looking ahead, he said investors should closely monitor developments in geopolitical conflicts, particularly in the Middle East, as well as U.S. labor market data, both of which could influence growth expectations and market direction.

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