(18/05/26)

Goldman Sachs’ latest market monitor highlighted a major shift in investor positioning, with AI-related equities increasingly being treated as defensive growth assets amid inflation and geopolitical uncertainty. The bank noted that the Nasdaq has rallied 26% from March lows, while the Philadelphia Semiconductor Index has surged more than 60%.

The bank also warned that market valuations are becoming increasingly stretched. Goldman’s proprietary Risk Appetite Indicator reached 1.1, a level seen only 2% of the time since 1950, while momentum strategies have sharply outperformed broader markets.

On commodities, Goldman reiterated that Middle East tensions remain the market’s largest downside risk. The bank expects central-bank gold purchases to rise toward 60 tonnes per month through 2026, while maintaining a long-term gold target of $5,400/oz.

For bankers, AI infrastructure remains the dominant capital allocation story, supporting deal activity across semiconductors, cooling systems, data centres and energy infrastructure.

Market implications

• AI continues attracting defensive capital flows

• Valuation concentration risk is increasing

• Gold and commodities remain supported by geopolitical uncertainty

M&A / deal flow implications

• Continued momentum in AI infrastructure transactions

• Semiconductor and data-centre consolidation likely to accelerate

• Energy infrastructure financing remains active

3 key takeaways

1. AI is increasingly viewed as a defensive sector

2. Market positioning is becoming more crowded

3. Geopolitical risks continue supporting commodities