Goldman offered stocks to protect against the "soft-apocalypse." They are growing faster than the S&P 500

Goldman Sachs traders have unveiled a ready-made trading strategy for investors who want to protect themselves from the "software apocalypse" - a sell-off in the shares of software developers over fears that AI will disrupt their business models. Over the past 12 months, a basket of stocks compiled by the bank has outperformed the sectoral S&P 500 in terms of growth by nearly 80 percentage points.

Goldman Sachs has put together a basket of stocks consisting of two bets, Bloomberg reported. The first is long positions (long, in the expectation of growth) on companies whose business, according to the bank, will be difficult to replace artificial intelligence. The second is short positions (short, expecting to fall) on those who, on the contrary, are seriously threatened by AI.

"We expect the long-part of the basket to recover from the recent sell-off in the software sector, while the short-part will lag," Faris Murad, vice president of Goldman Sachs' U.S. custom basket team, wrote in a note to clients (as quoted by Bloomberg).

Based on a Bloomberg chart, the Goldman Sachs basket showed a return of 62.66% in the 12 months through Feb. 13. By contrast, the S&P 500 sector index for software developers fell 12.3% over the same period.

Goldman recommends buying shares of companies whose businesses can directly benefit from AI adoption, including providers of computing power, data infrastructure, cybersecurity solutions, major cloud services and AI development platforms.

This part of the basket included Cloudflare, CrowdStrike, Palo Alto Networks, Oracle and Microsoft, among others, Bloomberg writes.

The business of the companies on this part of the list will be difficult to replace because it involves physically implementing, regulating or holding people accountable, the agency explained.

Goldman traders highlighted companies building out programmatic workflows that can be automated or rebuilt internally as AI capabilities expand.

Monday.com, Salesforce, DocuSign, Accenture, and Duolingo, for example, ended up in this part of the list.

The launch of the strategy comes amid heightened investor anxiety about AI's disruptive potential for entire industries, Bloomberg writes. In early February, AI startup Anthropic unveiled a productivity tool aimed at in-house legal teams. That set off a massive market sell-off that investors called a "software apocalypse." Market skepticism toward software developers had been building for months, but in February sentiment shifted from cautious to defensive, Bloomberg noted.

The selloff has also led to a revision of valuations. A year ago, shares of software companies were trading at a P/E ratio (the ratio of share price to projected annual earnings) of about 51, making this segment the most expensive on the stock market. Today, the sector trades at about a P/E of 27, Bloomberg notes.

At the same time, profit expectations remained largely unchanged. The software and services subsector, according to Bloomberg Intelligence forecast, should show revenue growth of about 14.1% in 2026. Meanwhile, analysts expect the technology sector as a whole to grow by about 31.7% thanks to the semiconductor industry. However, the projected earnings growth for the S&P 500 index for the year is -13.7%, Bloomberg writes.

This article was AI-translated and verified by a human editor