Goldman Sachs: AI Trade Unwind Poses Biggest Risk to Markets
Markets wobbled after Friday’s weak jobs report, but the S&P 500 held near record highs. Investors are betting the Fed’s rate cuts will offset slowing growth and keep the economy out of recession.
Goldman Sachs, led by David Kostin, now expects three rate cuts this year and two more in 2026. The bank forecasts the S&P 500 will reach 6,600 by year-end and 6,900 by mid-2026, fueled by steady 7% EPS growth in both 2025 and 2026.
But the near-term risk? An unwind of the AI trade. Nvidia has dropped 9% since August, and AI-related stocks have lagged the broader market. The key driver will be capex spending from Amazon, Alphabet, Meta, and Microsoft.
For Q4, Goldman suggests three plays:
- Alternative asset managers (KKR, Blackstone, Apollo) – undervalued vs. banks.
- High floating-rate debt firms (Peloton, Lumen, Petco) – earnings boosted by falling rates.
- Gold miners (Dakota Gold, AngloGold Ashanti, Royal Gold) – leverage to a 14% expected rise in gold prices.
John Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis.
DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets.
He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC).
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