Want to diversify away from AI? Goldman says look at these stocks
Goldman Sachs recommends a group of stocks as investors look for opportunities beyond the artificial intelligence trade that’s lifted prices ever since late 2022. The broader market sailed through rough waters last week as AI stocks sold off. The S & P 500 fell nearly 1.6% , but the tech-heavy Nasdaq Composite slid nearly twice as much, down 2.9% last week, while AI-related shares were hit harder still. The Global X Artificial Intelligence & Technology ETF tumbled 7.5%. “While many fund managers have maintained a bullish fundamental view on the AI infrastructure complex, recent volatility has made it challenging to maintain that view,” Goldman analysts led by Ben Snider wrote after the market closed Friday. “Our conversations with investors have also focused on the challenge of finding investment opportunities not tied to AI.” To find stocks that aren’t correlated to the boom in artificial intelligence infrastructure investment, Goldman focused instead on alternative investment themes, among them: companies tied to consumer spending (“Consumer Experience”) and highly profitable companies trading at steep discounts (“Compounders”). Five companies from each of those groups are in the table below. Formula One Group Series, a tracking stock owned by Liberty Media that reflects the economic interest in the commercial operations of the FIA Formula One World Championship, appeared in the consumer experience group. Morgan Stanley reiterated Formula One as a top pick with a $120 price target (implying a 21% upside from Monday’s close) earlier this month. Analyst Sean Differley called the sport “under-penetrated and under-monetized,” highlighting growth opportunities in the U.S. and China. 11 of 13 analysts covering Formula One rate it a buy or strong buy, according to LSEG data. Live Nation made it on to Goldman’s screen as demand for live events continues to expand. UBS, in a report out Monday, raised its price target for Live Nation to $208, implying 15% upside. “We expect demand for live events to remain strong globally with double-digit fan growth across major venues,” UBS analyst Batya Levi wrote. MSCI was among the compounders, or stocks that Goldman said offer strong earnings growth, where returns on capital have recently lagged and that now trade “at a large valuation discount.” Jefferies initiated research coverage of the financial services company with a buy on Friday, setting a price target of $760, implying almost 22% upside from Monday’s close. Analyst Surinder Thind said the global index provider is especially attractive due to a “strong competitive moat, a broadening of the client base, growing exposure to the private markets, high-visibility recurring revenues and limited risk of AI disruption” Marriott International was classified by Goldman as both a compounder and a consumer experience company. Morgan Stanley increased the hotel chain’s price target to $380 from $353 on Friday, implying about 4% upside from Monday’s close. “Marriott has transformed its business over the past 10 years, shedding owned real estate, spinning off timeshare and shifting management contracts to be more variable,” Morgan Stanley analyst Stephen Grambling wrote. “We believe these shifts provide dramatically lower cyclicality that should prompt a further re-rating.”
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