US Stocks Return to "Pre-War Themes," Goldman Sachs: "Gold Mining Stocks" Notably Lagging Behind

The US-Iran agreement has not yet been reached, and risk sentiment remains to be tested on Monday. Previously, ceasefire news had already led to a rapid decline in geopolitical risk premiums, with US stock investors returning to pre-war mainstream trading themes such as AI. Data shows that the S&P 500 and Nasdaq 100 have risen for seven consecutive trading days, marking the longest winning streak since September 2025; the European Stoxx 600 recorded its largest single-day gain since March 2022 on Wednesday.

Louis Miller, head of Global Equity Custom Basket at Goldman Sachs, noted in a recent report that gold mining stocks have clearly failed to keep up with this rebound, with their stock prices diverging from strong earnings revisions. The report maintains the forecast of $5,400 per ounce for gold prices by the end of 2026 and believes that mining companies benefit from positive operating leverage, and their free cash flow has significantly improved.

Meanwhile, AI infrastructure-related trades have generally risen by about 17% to 18%, with high-beta momentum portfolios recording their best two-day performance since the pandemic. Momentum is not yet overbought, and if the fundamentals remain solid during the earnings season, this rally may have room to continue. AI infrastructure has become a core catalyst for the earnings season, with the information technology sector expecting an earnings growth of up to 44%.

In terms of hedging strategies, it is recommended to "buy downside protection directly at the source of risk." Traditional hedging tools have weakened due to increased stock-bond correlation and a decrease in the safe-haven value of the Japanese yen, making VKO put options a low-cost alternative.

Gold Miners' Dislocation is Evident, Central Bank Demand Provides Support

Gold mining companies are listed as one of the most attractive dislocation opportunities currently. Despite a recent rebound, the gold mining basket remains approximately 16.9% below its pre-war high, showing a significant divergence from persistently strong earnings per share revisions.

Commodity analysts maintain their forecast of $5,400 per ounce for gold prices by the end of 2026, citing reasons such as continued diversification by central banks, normalization of speculative positions, and an expected 50 basis point interest rate cut by the Federal Reserve. The report points out that gold mining companies benefit from positive operating leverage, have significantly improved free cash flow, and have the potential to increase their dividend yields.

Furthermore, recent gold price volatility is partly due to crowded positions caused by a surge in option demand at the beginning of the year. If the de-risking process is largely complete, the long-term upside risk in escalating scenarios will be significantly skewed upwards, especially as concerns about Western fiscal sustainability rise.

AI Trades Reclaim Dominance

The focus of the current US stock market has clearly returned to pre-war themes. Software and semiconductors, in terms of relative strength, were at the bottom of the week's declines at 23.7%; while AI infrastructure-related trades have broadly rebounded, with the Asia AI computing power basket up 17.9%, the US optical networking basket up 17.4%, and the global memory basket up 17.5%.

The high-beta momentum portfolio recorded its best two-day gain since the COVID-19 pandemic this week, primarily driven by the rapid unwinding of geopolitical risk premiums following the ceasefire announcement. The report shows that the correlation between momentum portfolios and AI trades has risen to a high level, while the correlation with software/semiconductors has fallen to a low level, which is consistent with the TMT momentum portfolio achieving its best five-day performance ever.

Momentum has not yet entered overbought territory, and if fundamentals remain robust during the earnings season, the current breakout rally may continue. For contrarian investors who believe the software sector has fallen too much, Goldman Sachs recommends positioning through call spread options on the software recovery basket.

Earnings Season Approaches: AI Drives Profit Growth, Cyclical Stocks Still Have Upside

Approximately 40% of the S&P 500's baseline forecast for 12% earnings per share growth in 2026 comes from AI infrastructure investments. Market consensus expects the information technology sector to achieve 44% earnings per share growth in the first quarter, contributing 87% of the index's overall earnings growth for the quarter. The expected threshold for AI capital expenditure-related trades is already quite high.

The most favored AI infrastructure trades include the memory basket and the AI data center basket, with the latter recently incorporating emerging sub-categories such as liquid cooling, optical networking, and inference beneficiaries. The price trends of both baskets have diverged from their earnings per share revision data, and the first-quarter earnings season is expected to be a catalyst for prices to revert to fundamentals.

For companies outside the technology sector, market focus will be on how corporations respond to the shock of energy prices and supply chain disruptions. If first-quarter earnings and forward guidance support the baseline scenario of 12% earnings growth, the market will further digest growth and recession risks, driving cyclical stocks to outperform defensive stocks – which are currently about 6.3% below their year-to-date highs.

Emerging Markets Being Repriced, China A-shares Possess Structural Advantages

Although the two-week ceasefire agreement triggered a brief rebound in Asia-Pacific markets, the subsequent chaotic price action indicates that investor confidence remains fragile. Since the outbreak of the conflict in the Middle East, foreign investors have significantly reduced their risk exposure, with South Korea experiencing net outflows of $24 billion, leading the exodus.

Given the current light positioning and intact regional fundamentals, investors will gradually shift from a comprehensive "risk-off" mode to strategic allocation in market sectors with structural insulation against energy shocks.

China's economy is better positioned to cope with oil price shocks than its global peers, thanks to its energy diversification strategy and high penetration of renewable energy. Its relatively low valuation further strengthens the investment logic for China A-shares. Goldman Sachs continues to be bullish on China HALO trades and maintains its optimistic stance on the Asian AI computing power theme, which benefits from the "AI super cycle" evidenced by Samsung's record-breaking first-quarter results.