Scared of the AI trade? Here are three investment themes Goldman Sachs is offering instead.

By Jamie Chisholm

Semiconductors have fallen into a bear market, prompting some investors to look elsewhere

Consumer-experience stocks should be AI-resilient, say Goldman Sachs strategists.

Fair to say there is currently much more wariness about the artificial-intelligence investment theme. The PHLX Semiconductor Index SOX, replete with AI chip names like Nvidia and Micron Technology, is now in a bear market, having dropped 20% from the intraday peak touched about a month ago.

Indeed, a team of Goldman Sachs analysts led by Ben Snider say that "painful volatility" in the popular AI infrastructure stocks has renewed investor interest in investment themes outside of AI.

And, in a note published late Friday, the Goldman team set out three of those alternatives.

The first is what the Goldman analysts call consumer-experience stocks, which "offer exposure to strong secular growth in consumer spending on experiences at undemanding valuations with limited AI disruption risk."

Goldman says that spending growth on experiences - such as sports centers, parks, theaters and museums, and gambling - has accelerated from 1% in the first quarter of 2025 (versus 2% for broader services) to 6% in the first quarter of 2026 (versus 2%).

"Many of these experiences skew towards the high end of the income distribution," Goldman says. "In addition, the physical nature of these experiences should be insulated from AI disruption relative to other services offerings."

Goldman looked at companies with a market capitalization above $2 billion and found 36 contenders, the 10 biggest of which are shown below. A key risk to the trade is a weakening in the health of the consumer, including via higher oil prices or a softening labor market.

The second theme is what the investment bank terms compounders, a group of companies "that have generated consistent earnings growth, elevated returns on capital, and strong free cash flow conversion."

Goldman screened the Russell 1000 for stocks that rank above the median stock in the index across a range of growth and quality metrics, including realized historical and consensus forward earnings-per-share growth, free-cash-flow conversion and return on invested capital.

Goldman excluded "the most clearly AI-related stocks, including both the beneficiaries of infrastructure spending and companies perceived to be at risk from disruption."

There are 15 compounders in Goldman's basket. The median stock trades at 22 times earnings, compared with 16 times for the equal-weight S&P 500, but that is a relative valuation near 10-year lows, Goldman calculates.

"Going forward, both the macro backdrop and the earnings growth outlook should be more supportive for the compounders' valuations. However, a dovish pivot from the Fed or a broad-based improvement in the economic growth outlook represent key risks," Goldman says.

The third basket is mergers-and-acquisitions targets. Goldman notes that M&A activity has surged this year, with the volume of announced deals totaling $1.2 trillion, a 32% increase on a year-on-year basis from 2025.

The number of announced deals has risen by 12%, with 40% of the deals in computers and electronics and in health care - though activity has been distributed across a range of industries.

"From a macro perspective, the combination of easy financial conditions, solid economic growth, healthy CEO confidence, and a friendly regulatory backdrop should support continued M&A activity," the analysts say. The key risk to the trade is a weakening in sentiment that threatens that M&A cycle, in the Goldman view.

The M&A basket contains 71 companies that Goldman analysts assess have a greater than 15% chance of being acquired. Below is the top 10 in that basket.

The markets

U.S. stock-indices SPX DJIA COMP are higher at the opening bell on Wall Street as Treasury yields BX:TMUBMUSD10Y move up. The dollar index DXY is a tad lower as gold futures (GC00) trade around $4,037 an ounce.

 
Key asset performance                                                Last       5d      1m      YTD     1y 
S&P 500                                                              7457.69    -1.55%  -0.57%  8.94%   18.44% 
Nasdaq Composite                                                     25,520.24  -2.90%  -3.76%  9.80%   22.13% 
10-year Treasury                                                     4.559      -6.10   4.30    38.70   17.50 
Gold                                                                 4020.7     -2.62%  -3.65%  -7.19%  19.83% 
Oil                                                                  81.31      13.70%  7.67%   41.63%  23.14% 
Data: MarketWatch. Treasury yields change expressed in basis points 

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The buzz

Global oil benchmark Brent crude (BRN00) traded back above $90 a barrel as fighting between the U.S. and Iran continued. However, prices later fell back and have been choppy after Iran's foreign ministry said diplomatic efforts are continuing.

The second-quarter earnings season will pick up the pace this week with Tesla (TSLA), Alphabet (GOOGL) and IBM (IBM) presenting results on Wednesday and Intel (INTC) on the Thursday docket.

Domino's Pizza shares (DPZ) are jumping after the pizza-chain operator released earnings early Monday.

AMC Entertainment's shares (AMC) are sharply higher after the movie theater operator surprised Wall Street with strong second-quarter earnings.

Brookfield (BAM) and CPP Investments are buying LXP Industrial Trust (LXP) in a $5.2 billion all-cash transaction.

U.S. economic data due Monday include the leading-indicators report for June, set to be released at 10 a.m. Eastern.

World Cup champion Spain just won $50 million - and the IRS gets a cut.

The chart

It's been a tough time for gold bugs in recent months, but are things about to get better? Analysts at Sentimentrader note that gold has entered its best seasonal window of the year - from the 134th trading day to the 207th, which corresponds to July 9 to Oct. 21. "Despite a recent 25% pullback from highs, the seasonal chart suggests a bullish bias for the next several months," they say.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

 
Ticker  Security name 
NVDA    Nvidia 
SPCX    SpaceX 
TSLA    Tesla 
MU      Micron Technology 
TSM     Taiwan Semiconductor Manufacturing 
AAPL    Apple 
AMD     Advanced Micro Devices 
MSFT    Microsoft 
SNDK    Sandisk 
GME     GameStop 

Soccer legend gives verdict on World Cup final's first-ever halftime show.

-Jamie Chisholm

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07-20-26 0930ET

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