Goldman Sachs co-chief investment officer Alexandra Wilson-Elizondo predicts that the technology sector will face pressure as artificial intelligence advances. In an interview with Bloomberg, she explained that the Asset Management team at Goldman Sachs is taking profits out of tech companies and investing in cheaper options from sectors such as energy and Japanese shares. Despite being long on equities, Wilson-Elizondo believes there are more attractive opportunities in other sectors.
The tech industry’s risk-reward profile is seen as skewed negatively, with major tech companies facing challenges. Nvidia, Apple, Microsoft, Alphabet, Amazon, and Meta Platforms have had varied performance year-to-date. However, Tesla has struggled significantly due to concerns over electric vehicle demand impacting its stock price.
Goldman analysts are favoring energy shares as a hedge against inflation and geopolitics, noting the strong performance of S&P Oil & Gas this year. While the U.S. economy is expected to experience a soft landing, there are still risks of a change in trajectory. The team remains cautious on utilities, REITs, and small caps due to their sensitivity to high-interest rates but may target some small-cap stocks with attractive valuations by AI companies.
In summary, Wilson-Elizondo emphasizes a diversified approach to investing while highlighting potential opportunities in sectors outside of technology. By assessing risk factors and market trends effectively, Goldman Sachs aims to navigate the evolving investment landscape successfully.
