Goldman Sachs’ (GS) multi-asset solutions team said it’s shifting its investment strategy away from the tech sector (XLK) amid potentially diminishing returns. Co-chief investment officer Alexandra Wilson-Elizondo said in a Bloomberg interview that the firm is capitalizing on the recent gains in technology to diversify into sectors offering more value, such as energy (XLE) and Japanese equities (EWJ).
Despite a bullish stance on equities in general, Wilson-Elizondo points out that the tech sector’s risk-reward balance leans towards the downside. This adjustment comes as tech giants like Nvidia (NVDA) and Meta Platforms (META) show significant year-to-date gains.
In addition, the team remains cautious on sectors that are highly sensitive to interest rate changes, such as utilities (XLU) and real estate (XLRE), while keeping an eye on undervalued small-cap stocks (SPSM) that could attract attention from AI enterprises seeking acquisition targets.
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Turning to Wall Street, analysts appear to expect the most upside potential from the SPSM ETF with its $47.46 price target, implying a 14.84% gain from current levels.
