Goldman Sachs Launches "Anti-AI Impact" Themed Investment Portfolio: Long on Computing Power and Security, Short on Replaceable Software Stocks

To address the increasing volatility in software stocks, Goldman Sachs recently launched a new customized stock basket that bets on companies believed to be less susceptible to disruption from artificial intelligence (AI) than others.

Goldman’s offering is a software stock “long-short pair trade” portfolio: Long positions in companies considered difficult for AI to replace, typically those requiring physical execution, heavily regulated operations, or human accountability; while shorting companies whose workflows may become increasingly automated by AI or internally replaced by enterprises.

On the long side, Goldman favors companies that stand to directly benefit from rising AI adoption, including compute providers, data infrastructure firms, observability tools, cybersecurity companies, large-scale cloud service providers, and AI development platforms. Included in this basket are companies like Cloudflare, CrowdStrike, Palo Alto Networks, Oracle, and Microsoft.

On the short side, traders target software-driven companies whose workflows could be automated or internally reconstructed as AI capabilities improve. These include Monday.com, Salesforce, DocuSign, Accenture, and Duolingo.

According to media reports, Faris Mourad, Vice President of Goldman Sachs’ US Custom Basket Team, wrote in a client report:

“We expect that as the recent sell-off in software stocks concludes, the long portion of the portfolio will rebound, while the short portion will continue to underperform.”

The launch of this basket comes amid growing market concerns over AI’s disruptive impact. Last week, Anthropic released an efficiency tool aimed at corporate legal teams, causing a sharp decline in legal software and publishing stocks.

Subsequently, the sell-off intensified. A lesser-known startup, Altruist, launched a tax strategy tool, which led to declines of over 10% in stocks like Charles Schwab and LPL Financial over the past week.

Media reports indicate that skepticism toward software stocks has been building for months, but recent market sentiment has shifted from cautious to clearly defensive. Fears that generative AI could erode traditional business models and compress profit margins have prompted investors to sell stocks across the industry.

This sell-off has also reset valuation levels. A year ago, software stocks had an average P/E ratio of about 51, making them the most highly valued sector in the stock market. Today, that ratio has fallen to approximately 27.

Overall earnings expectations remain relatively stable. According to media forecasts, the software and services sub-sector is expected to achieve about 14.1% earnings growth by 2026. While this growth rate is lower than the approximately 31.7% projected for the broader tech industry—benefiting from semiconductor sector expansion—it still exceeds the 13.7% earnings growth forecast for the S&P 500.

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