A Goldman Sachs executive says global equity markets are undergoing a sharp shift away from heavy concentration in mega-cap US technology stocks.
Rich Privorotsky, head of European One Delta trading at Goldman Sachs Global Banking & Markets, says investors are increasingly reallocating away from the so-called Magnificent Seven after years of dominance.
He says the shift is opening opportunities across cyclical sectors and emerging markets.
“So, I think it’s been a massive broadening trade so far. We should really kind of call out the underperformance of big cap tech and software. Particularly in software you’ve seen massive derating, and I think that’s a function of innovations in AI and what’s happened very recently.”
Privorotsky says pressure on large technology firms has come from heavy capital expenditures, reduced share buybacks, power and semiconductor constraints, and rising political scrutiny.
“We started at this point of just extreme concentration. If suddenly the forward returns don’t look as compelling and the valuation looks a little bit elevated, moving a couple of dollars out of these companies into everything else is a massive impact.”
He says the shift is visible in US equity benchmarks, with equal-weight indices and smaller-cap stocks outperforming, while cyclical stocks gain at the expense of quality and secular growth.
Privorotsky also pointed to strong demand across emerging markets as investors look beyond US assets.
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