Goldman Sachs Says AI Trade Broadens Beyond Semiconductors
Investors are expanding their focus beyond semiconductor companies and AI capital-expenditure beneficiaries, according to Goldman Sachs. Peter Callahan, the firm’s U.S. technology, media and telecommunications sector specialist, noted a shift toward businesses that help organizations adopt and deploy AI technologies. This broadening of the AI trade now includes infrastructure software, security software, agentic commerce, and data infrastructure, making the market increasingly driven by individual stock selection.
Callahan emphasized that while the AI theme remains strong, the market is seeking clearer evidence that the massive infrastructure spending is translating into measurable returns. Companies are reporting productivity gains and new revenue opportunities from AI, but investors want a more concrete “measuring stick” for the trillions of dollars being invested. Uncertainty has also grown around the pace at which data centers are being built and activated, raising questions about the linearity of AI deployment.
Higher interest rates are adding pressure to technology stocks, with Nasdaq valuations compressing by about 20% this year. Rising Treasury yields have contributed to this decline, meaning earnings growth must now compensate more for the reduced multiples. Despite this challenge, Callahan believes the AI theme and earnings growth remain intact, potentially offering a path higher for technology stocks into 2027 and 2028, provided AI delivers the expected productivity gains and corporate margins stay healthy.
In after-hours trading on Friday, the SPDR S&P 500 ETF (SPY) rose 0.03%, the Invesco QQQ Trust ETF (QQQ) was flat, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.12%. Retail sentiment on Stocktwits toward the S&P 500 ETF was described as ‘extremely bullish’ at the time of writing. Meanwhile, the iShares U.S. Technology ETF (IYW) is up 35% year-to-date, while the Global X Artificial Intelligence & Technology ETF (AIQ) has risen 30%.