Goldman Sachs (GS) has launched a software pair trade basket going long on firms perceived to be immune to advancements in artificial intelligence while shorting companies that could be vulnerable to AI-driven disruption.
The brokerage has selected companies building AI foundations and those providing security defenses as AI beneficiaries, including companies such as Cloudflare (NET), CrowdStrike (CRWD), Palo Alto Networks (PANW), Oracle (ORCL), and Microsoft (MSFT) for the long side.
On the short side, the firm picked companies such as Monday.com (MNDY), Salesforce (CRM), DocuSign (DOCU), Accenture (ACN), and Duolingo (DUOL), noting that their operations can be easily replaced by AI automation.
Goldman’s (GS) investment strategy comes amid a YTD underperformance of software stocks. The SPDR S&P Software ETF (XSW) has lost ~19% this year, while the S&P 500 (SP500) remains flat.
Vice President of Goldman’s (GS) US Custom Basket team, Faris Mourad, wrote in the report that the sector will see a clear division in performance as the selloff comes to an end.