U.S. stocks return to “pre-war themes,” Goldman Sachs: Notably, “gold mining stocks” have not kept up

U.S. stocks return to “pre-war themes,” Goldman Sachs: Notably, “gold mining stocks” have not kept up

The US-Iran agreement has not yet been reached, and risk sentiment on Monday remains to be tested. Previously, news of the ceasefire had rapidly eliminated geopolitical risk premiums, and US stock investors have returned en masse to pre-war mainstream trading themes such as AI. Data show that the S&P 500 and Nasdaq 100 have risen for seven consecutive trading days, marking the longest streak since September 2025; Europe's Stoxx 600 recorded its largest single-day gain since March 2022 on Wednesday.

Louis Miller, Head of Global Equity Custom Basket Business at Goldman Sachs, noted in the latest report that gold mining stocks have clearly failed to keep up with the current rally, as their stock prices have diverged from strong earnings revisions. The report maintains a forecast for gold prices at $5,400/oz by the end of 2026 and believes miners are benefiting from positive operational leverage and significantly improved free cash flow.

Meanwhile, AI infrastructure-related trades have generally risen about 17% to 18%, and the high-beta momentum portfolio recorded its best two-day performance since the pandemic. Momentum is not yet overbought; if fundamentals remain solid in earnings season, the current rally still has room to continue. AI infrastructure has become the key catalyst for earnings season, with expected earnings growth for the IT sector as high as 44%.

In terms of hedging strategies, it is recommended to “stay close to the source of risk” and directly purchase downside protection. Traditional hedging tools have weakened due to rising stock-bond correlation and declining yen hedging value, making VKO put options a low-cost alternative.

Gold Miners Are Clearly Distorted, Central Bank Demand Provides Support

Gold mining companies are listed as one of the most attractive mispriced opportunities at present. Although recently rebounding, the gold miner basket remains about 16.9% below pre-war highs, diverging significantly from continued strong per-share earnings revisions data.

Commodity analysts maintain a forecast for gold prices at $5,400/oz by the end of 2026, citing factors such as continued central bank diversification, normalization of speculative positions, and an expected 50 basis point Fed rate cut. The report states that gold miners benefit from positive operational leverage, free cash flow has greatly improved, and there is potential to raise dividend yields.

Additionally, recent gold price volatility partly stems from crowded positions caused by surging option demand at the start of the year. If the risk-off process is largely completed, in a scenario of escalation, long-term upside risk will skew sharply higher, especially as concerns about Western fiscal sustainability heat up.

AI Trading Returns to Dominance

The focus of the US stock market has clearly shifted back to pre-war themes. Software and semiconductors have shown relative weakness with a weekly decline of 23.7%, ranking at the bottom; AI infrastructure-related trades, however, have broadly rebounded, with the Asian AI computing basket up 17.9%, US optical network basket up 17.4%, and global memory basket up 17.5%.

This week, the high-beta momentum portfolio recorded its best two-day gains since the COVID pandemic, mainly due to the rapid clearing of geopolitical risk premiums after the ceasefire announcement. The report shows that correlation between momentum portfolios and AI trades has risen to a high level, while correlation with software/semiconductors has dropped to a low, confirmed by the TMT momentum portfolio achieving its best five-day performance ever.

Momentum has not yet entered overbought territory; if fundamentals remain solid in earnings season, the current breakout rally still has room to continue. For contrarian investors who believe software sector declines are overdone, Goldman recommends a bullish spread with software recovery basket call options.

Earnings Season Approaching: AI Drives Earnings Growth, Cyclicals Still Have Upside

In the S&P 500’s baseline forecast of 12% per-share earnings growth for 2026, about 40% comes from AI infrastructure investment. Market consensus expects IT sector earnings per share to grow 44% in Q1, contributing 87% of total index earnings growth this quarter, with a very high bar set for AI capex-related trades.

The most favored AI infrastructure trades include the memory basket and AI data center basket, with the latter recently incorporating new sub-categories such as liquid cooling, optical networks, and inference beneficiaries. Both baskets' prices have diverged from per-share earnings revision data, with Q1 earnings season expected to catalyze a return of prices to fundamentals.

For companies outside the tech sector, market focus will be on how enterprises respond to energy price shocks and supply chain disruptions. If Q1 earnings and guidance uphold the baseline scenario of 12% earnings growth, the market will further digest growth and recession risks, driving cyclicals to outperform defensives — this pair is still about 6.3% below year-to-date highs.

Emerging Markets Reprice, China A-Shares Hold Structural Advantages

Despite a brief rebound in Asia-Pacific markets triggered by the two-week ceasefire agreement, chaotic price action indicates investor confidence remains fragile. Since the outbreak of the Middle East conflict, foreign capital has sharply reduced risk exposure, with Korea seeing a net outflow of $24 billion, leading the withdrawal ranking.

Given current light positioning and solid regional fundamentals, investors will gradually shift from all-out “risk aversion” to strategic allocation in market sectors structurally insulated from energy shocks.

China’s economy is better able to respond to oil price shocks than global peers, thanks to its energy diversification strategy and high penetration of renewables, and low valuations further reinforce the investment logic in China A-shares. Goldman continues to favor China HALO trades and maintains a bullish stance on Asian AI computing themes, which are supported by Samsung’s record-breaking Q1 results evidencing the “AI supercycle.”

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