Goldman Sachs: AI spending boom brings hidden worries, global stock markets face a style shift

Deep Tide TechFlow message. According to Tide Research, Goldman Sachs’ Global Weekly Outlook said that global equity markets fell by about 2% last week. Momentum position liquidations intensified, dragging the technology sector down by 5%, while Japan, South Korea, and Taiwan saw declines ranging from 3% to 9%. Tensions in the Middle East pushed Brent crude oil back above $88 per barrel, and the energy and defense sectors outperformed.

Goldman’s strategy team warned that the AI capital expenditure boom is building up risks. If the profitability of large technology stocks deteriorates before AI returns begin to show, the stock market will suffer a double blow. Its long-term “institutionally neutral” portfolio points to lower stock weightings, lower technology weightings, and higher allocation to tangible assets. However, cutting exposure across the board in the short term would be too costly. Goldman proposed five compromise strategies: tilt toward high-quality factors; increase allocations to tangible assets such as commodities and infrastructure; diversify regionally into discount markets such as Europe and Japan; hedge tail risks by going long volatility via options; and selectively participate in application-layer targets with stronger AI monetization capabilities.