Goldman Sachs is pointing investors toward three distinct investment themes as extreme volatility rattles AI infrastructure stocks and reshapes how markets are being navigated.
The Wall Street bank argues that consumer experience companies, high-quality compounders, and potential mergers and acquisitions targets offer growth exposure with minimal correlation to its AI baskets.
Goldman Sachs U.S. portfolio strategist Ben Snider, writing alongside Ryan Hammond, Jenny Ma, Daniel Chavez, Kartik Jayachandran, and Christophe Sung, authored the latest research note outlining the shift.
The momentum factor recorded annualized three-month volatility of 36 percent, the highest level in its 45-year history outside of recession periods, according to the bank.
Goldman Sachs expects near-term challenges for the AI infrastructure momentum trade to persist, citing elevated volatility, positioning concerns, and the absence of a favorable catalyst.
The equal-weight S&P 500 continues to reach new highs while stock correlations have fallen to multi-decade lows, creating room for alternative themes to gain traction among institutional investors.
The first theme covers 36 companies focused on physical consumer experiences, spanning movies and entertainment, casinos and gaming, hotels, resorts, cruise lines, and leisure facilities.
Consumer spending on experiences accelerated to 6 percent year-on-year growth in the first quarter of 2026, compared with just 2 percent growth in broader services spending, Goldman Sachs noted.
The second theme centers on 15 compounders characterized by strong earnings growth, high returns on invested capital, robust free cash flow conversion, and healthy balance sheets.
The median stock in this group has grown earnings per share more than twice as fast as the median S&P 500 stock over the past three years, with analysts projecting that advantage to continue.
Despite superior earnings performance, the compounders have underperformed the equal-weight S&P 500 by 7 percentage points year-to-date and trade at a historically low valuation premium.
Names in this group include Visa (V), Mastercard (MA), Booking Holdings (BKNG), MSCI (MSCI), DexCom (DXCM), Insulet (PODD), and On Holding (ONON).
The third theme targets potential M&A candidates, with announced U.S. deal activity reaching $1.2 trillion year-to-date, up 32 percent from a year earlier and with deal volume rising 12 percent.
Goldman Sachs said its basket of 71 potential targets has outperformed the equal-weight S&P 1500 by 8 percentage points since the end of the first quarter of 2026.
Acquisition candidates identified by Goldman analysts include Imax (IMAX), Okta (OKTA), Nutanix (NTNX), HubSpot (HUBS), SentinelOne (S), Freeport-McMoRan (FCX), ConocoPhillips (COP), Occidental Petroleum (OXY), and Diamondback Energy (FANG).
