Goldman Sachs Bets on AI-Proof Software Stocks

Goldman Sachs Group Inc. has launched a custom basket strategy to help investors navigate the increasing disruption posed by artificial intelligence in the software sector. The firm is positioning the basket to benefit from companies perceived as more resilient to AI's capabilities.

The strategy involves a pair trade: going long on software companies whose business models are considered difficult for AI to replicate, due to factors like physical execution requirements or regulatory entrenchment. Simultaneously, it shorts companies whose workflows are seen as more susceptible to automation or in-house replication by AI.

This initiative reflects a broader market anxiety surrounding AI's potential to disrupt traditional business models and compress profit margins. Valuations for software stocks have significantly adjusted, with price-to-earnings ratios decreasing from approximately 51 times earnings a year ago to about 27 times earnings currently.

Despite valuation shifts, earnings expectations for the software and services subsector remain positive, with projected growth of around 14.1% in 2026. This resilience is observed even as recent events, such as the launch of AI-powered productivity tools, have triggered sharp selloffs in specific software segments.