The AI stocks are viewed as a defensive trade amid worries about inflation, oil and slow growth, which are weighing on broader risk appetite, according to Goldman Sachs Group Inc. (NYSE:GS).
Investors Seek Safety In AI Stocks
According to a Monday report from Business Insider, investors are favoring hyperscalers and AI-focused stocks, which may now be seen as more insulated from the issues that could soften the economy.
Goldman’s Shawn Tuteja said, “We’re seeing this massive rotation back into the hyperscalers, back into the AI names as people view that story as more inelastic demand and able to withstand the things that the consumers aren’t.”
This is a sharp reversal in the trend seen at the start of the year, when traders flocked into economically sensitive areas like homebuilders, industrials, and consumer stocks on expectations of easing inflation, potential Federal Reserve cuts and a stronger cyclical backdrop.
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