Goldman Sachs says one major investment theme is reviving as the market stages a comeback.
On a new episode of the bank’s Exchanges podcast, Dominic Wilson, senior markets advisor in Goldman Sachs Research, says that artificial intelligence (AI) stocks are coming back into favor.
“What we have seen is that the AI theme, not just in terms of conversation, but in terms of what markets are actually doing, has come back very, very fast. Semiconductor stocks … [are] doing really well.
We’ve had more pressure on software stocks, even in this recovery period. You’ve had semiconductors make new highs… And so that theme is back.”
However, Wilson warns that investors should expect market volatility in the near-term and advises them to react nimbly.
“You should have selective long risk in the things you like, and you should be pretty aggressively hedged, because there are these downside risks that are still very prominent and could easily unsettle things…
If you’ve been relatively well hedged as the market moves lower … you should start thinking about adding some risk at lower prices to the things that you like. And as you move up, the market relaxes … you should start thinking about whether you should add to your hedges more aggressively.”
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