US small-cap stocks outperformed large-cap stocks in US market; largest outperformance vs large caps since 2003
Three Not AI Investing Themes
The key insights today: ▪As AI infrastructure stocks gyrate, Goldman Sachs Research highlights three investment themes outside of the emerging technology. ▪Investors are rotating from US large-cap stocks toward their small-cap counterparts, setting up a potential multi-year rally for US small caps, according to Goldman Sachs Asset & Wealth Management. ▪Quoted: why US inflation could cool ▪Despite macroeconomic uncertainties, M&A activity rose 48% in the first half of 2026, and Goldman Sachs Global Banking & Markets believes there’s more room to run. ▪Briefings Brainteaser: Which of these G10 currencies has strengthened against the British pound this year? Want to sign up and stay connected? Click here. Three Stock Themes Unrelated to AI A jump in the volatility of stocks related to artificial intelligence (AI) infrastructure has triggered renewed interest in investment themes outside of the technology. “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 in portfolios,” Ben Snider, chief US equity strategist, writes in a report. “Our conversations with investors have also focused on the challenge of finding investment opportunities not tied to AI, with many sectors trading with a strong positive or negative correlation to AI and momentum in recent months,” Snider writes. Goldman Sachs Research highlights three investment themes that are unrelated to AI and have minimal correlation to those stocks: Consumer-experience stocks offer exposure to strong, sustained secular growth in consumer spending on experiences. These equities trade at undemanding valuations and have limited risk from AI disruption. Stocks that Goldman Sachs Research describes as “compounders” have strong earnings growth, returns on capital, balance sheets, and free cash flow conversion but have recently lagged behind. They now trade at a historically large valuation discount. M&A candidates, identified by equity analysts in Goldman Sachs Research, are stocks that do not appear to have priced in the ongoing surge in M&A activity. A group of potential M&A candidates identified by Goldman Sachs Research equity analysts has outperformed sharply in recent weeks. Read the full article or find more of our insights on financial markets. Why the Outperformance of US Small-Cap Stocks Could Be Here to Stay US small-cap stocks finished the first half of 2026 with their biggest outperformance relative to US large caps since 2003. The gains may be the start of a multi-year rally, according to Greg Tuorto of Goldman Sachs Asset & Wealth Management.
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