Goldman Names 23 Defensive Stocks for Investors Worried About the AI Trade
Goldman Sachs is steering buyers frightened about the synthetic intelligence (AI) commerce towards well being care and shopper staples shares.
Goldman’s name comes lower than per week after RBC Capital Markets minimize tech to market weight. On October 14, RBC advisable well being care as an alternative.
Rising Rates Put the AI Earnings Engine Under Pressure
Goldman’s case begins with interest rates. Analysts led by Ben Snider stated months of rate pressure have raised considerations over the value of capital. In flip, the inventory market has lowered its progress expectations.
“A pointy discount in investor positioning has amplified fairness market strikes,” the analysts stated.
Goldman’s Cyclicals vs. Defensives pair fell 6% in the previous 2 weeks, that means cyclical shares underperformed defensive ones.
That issues for index buyers, since Goldman estimates AI capital spending drives about half of S&P 500 earnings growth. The financial institution expects that share to shrink as spending progress slows. It additionally sees S&P 500 earnings progress cooling from round 29% in 2026 to 18% in 2027.
RBC reached well being care by way of a distinct sign. Lori Calvasina, its head of US fairness technique, stated the tempo of upward earnings revisions stays sturdy for tech total. However, that tempo has began to gradual considerably for semiconductor and chip gear shares in the Russell 3000.
Chip inventory costs additionally weakened that week. The Philadelphia Semiconductor Index ended the week down 11.4%, its steepest weekly loss since April 2025.
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Goldman’s Defensive Shortlist Leans on Cash Flow
Goldman also screened for particular person shares. The list holds 23 well being care and staples names with low volatility and high free money circulate yields.
| Company | YTD efficiency |
|---|---|
| Tyson Foods | -7.9% |
| Royalty Pharma | +56.0% |
| CVS Health | +16.8% |
| JM Smucker | +29.9% |
| Kroger | +0.9% |
| Cardinal Health | +22.9% |
| HCA Healthcare | -2.6% |
| Hormel Foods | -14.1% |
| Performance Food Group | +6.4% |
| Sysco | +10.7% |
| Kenvue | +9.4% |
| Hershey | -8.2% |
| US Foods | +33.3% |
| Merck | +36.5% |
| ResMed | -0.5% |
| Quest Diagnostics | +35.4% |
| Chemed | +18.8% |
| Abbott Laboratories | -16.9% |
| Mondelez International | +17.7% |
| McKesson | +23.2% |
| Church & Dwight | +24.1% |
| AbbVie | +23.7% |
| Colgate-Palmolive | +18.2% |
Some have not too long ago lagged however may catch up if buyers abruptly minimize earnings progress expectations. Tyson Foods has the record’s highest free money circulate yield at 11% over the trailing 4 quarters.
Its shares have fallen almost 8% since the begin of 2026. Over the previous 6 months, the inventory is down about 16.8%, closing at $54 on October 19. It carries a 3.72% dividend yield.
CVS Health made the minimize with a 9% free money circulate yield. The inventory has gained almost 17% since the begin of 2026 however slipped 15% over the previous 3 months. It yields 2.88%.
Goldman strategists additionally advised purchasers that well being care has usually been amongst the best-performing elements of the S&P 500 when progress is constructive however slowing.
Still, Goldman’s base case calls for continued earnings progress. Its economists count on weaker vitality costs and falling rates in 2027 to carry family spending and lagging consumer-facing shares.
The defensive display covers the different situation. According to the financial institution, buyers frightened a few weaker consequence “ought to give attention to shares in defensive industries with ‘high quality’ attributes.”
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