Goldman Sachs August US Conviction List update: Adding six high-conviction Buy ideas to position for a broader market rally

Overview

This report is the August 2026 update to the Goldman Sachs US Conviction List - Directors’ Cut, themed “Stocks for a broadening market.” It reviews July market volatility, second-quarter earnings, AI data-center monetization, interest rates, energy shocks, inflation, and US consumer resilience, and uses these factors to update the high-conviction Buy list.

Core views

The core view is that although the AI trade remains important, the equal-weighted S&P 500 has outperformed the market-cap-weighted index over the past two months and index correlations have fallen to near decade lows, creating a better environment for fundamentals-driven stock picking. Goldman Sachs added AMAT, DAL, MSFT, ORLY, VIK, and UPS, viewing these companies as having differentiated drivers including AI supply-chain exposure, airline pricing power, enterprise AI monetization, automotive aftermarket share gains, premium cruise growth, and logistics profit recovery.

Analysis framework

The report applies a bottom-up fundamental research framework in which covering analysts propose Buy-rated ideas, after which an investment review committee composed of Americas Research management selects 20 to 25 of the most differentiated, higher risk-adjusted-return investment ideas. The report also evaluates list performance using monthly returns, relative benchmark returns, hit rates, and upcoming earnings catalysts.

Methodology notes

• Fundamental researchConviction List - Directors’ Cut

  High-conviction Buy list

  The list selects the most differentiated Buy-rated stocks identified by analysts across Goldman Sachs Americas Research coverage, targeting 20 to 25 names; it is not a portfolio and does not control for weights or industry diversification.

• Performance evaluationHit Rate

  Hit rate

  Hit rate is defined as the proportion of stocks that outperform a specified benchmark during the list period. The report compares performance against the S&P 500, equal-weighted S&P 500, GICS sectors, and the GS Americas coverage universe.

• Macro and thematic backdropMarket broadening and low-correlation stock-picking environment

  The market is broadening from a concentrated AI trade toward wider opportunities

  The report believes declining index-level correlations, periodic outperformance by the equal-weighted index, and consumer and earnings resilience provide stock-picking investors with greater alpha opportunities.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Applied Materials Inc. (AMAT)

  New list constituent and beneficiary of semiconductor equipment demand and AI capacity expansion.

  Strengths

  Has significant exposure to deposition and etch equipment, which are critical to capacity expansion in advanced logic, DRAM, and advanced packaging; the report says it can gain pricing power and market share.

  Weaknesses

  The business is highly correlated with the semiconductor capital-spending cycle, and growth expectations could come under pressure if AI-related capacity expansion slows.

  Comparison

  Relative to peers, the report believes AMAT has a superior equipment mix and market share in high-growth segments.

  Risks

  Wafer-fabrication-equipment demand below expectations, slower AI infrastructure investment, and deferred customer capital spending.

• Delta Air Lines Inc. (DAL)

  New list constituent and representative of the airline consumer experience and industry pricing power.

  Strengths

  Benefits from pricing power following industry consolidation and has greater exposure to international and business travelers; analysts expect a 300-basis-point margin expansion over the next two years.

  Weaknesses

  The airline industry is sensitive to fuel prices, the economic cycle, and passenger demand.

  Comparison

  The report views DAL as one of the best-positioned companies in an airline industry with improving structural dynamics.

  Risks

  Another increase in fuel costs, slower business and international travel, and intensified price competition.

• Microsoft Corp. (MSFT)

  New list constituent and core beneficiary of enterprise AI monetization and accelerating cloud growth.

  Strengths

  The report believes the AI revolution is shifting from training and infrastructure toward enterprise applications, and that MSFT can provide the AI solutions, integration layer, and model-routing capabilities enterprises need; recent results show accelerating Azure growth, improving AI unit economics, and increasing evidence of Copilot monetization.

  Weaknesses

  Valuation and expectations are highly sensitive to the pace of AI commercialization.

  Comparison

  Relative to infrastructure component suppliers, the report emphasizes that MSFT is closer to enterprise AI workflows and monetization.

  Risks

  Azure growth below expectations, slower-than-expected Copilot monetization, and rising debate over AI return on investment.

• O’Reilly Automotive Inc. (ORLY)

  New list constituent and an offensive share gainer in the defensive automotive aftermarket.

  Strengths

  The report believes it continues to gain share in the “Do it for Me” market, faces less competitive intensity around its stores than some peers, and supports EPS growth through buybacks and reinvestment.

  Weaknesses

  Consumer inflation and volatility in automotive repair demand could affect sales.

  Comparison

  Compared with Advance Auto Parts and AutoZone, the report says O’Reilly stores face less competition within a 5-to-10-mile radius.

  Risks

  Slower consumer spending, parts inflation, and peer price competition.

• Viking Holdings Ltd (VIK)

  New list constituent and representative of cruise travel services and consumption experiences among high-income customers.

  Strengths

  Its differentiated geographic exposure and higher-income customer mix are viewed as offsets to a more volatile cruise macro environment; the report expects industry-leading pricing and capacity growth to continue from the second half of 2026 through 2027.

  Weaknesses

  Cruise demand is related to premium consumer confidence, fuel costs, and travel spending.

  Comparison

  The report describes it as one of the best growth profiles within a volatile cruise macro environment.

  Risks

  Lower consumer confidence, higher energy costs, and weaker pricing in the cruise industry.

• United Parcel Service Inc. (UPS)

  New list constituent and a logistics revenue and profit inflection story.

  Strengths

  The report believes UPS is approaching a sustained revenue and profit inflection after three years of revenue erosion, having exited part of its low-margin Amazon contract, reset its network, and reduced structural costs; revenue is expected to grow 4% to 6% annually by 2028, with EBITDA growth exceeding 20% over the next three years.

  Weaknesses

  Logistics demand and margins remain affected by macro conditions, energy costs, and network execution.

  Comparison

  The report emphasizes that its earnings recovery is driven by contract structure, network efficiency, and higher-margin customers rather than merely valuation multiple expansion.

  Risks

  Cost savings below expectations, insufficient growth among high-margin SMB and healthcare customers, and fuel and labor cost pressures.

• ServiceNow Inc. (NOW)

  Removed from the list this month but remains a Buy-rated stock.

  Strengths

  The report notes that analysts reiterated their Buy rating after second-quarter results and raised the target price to $152, believing evidence of AI use cases has become more concrete.

  Weaknesses

  The list committee believes it is no longer one of the highest-priority top investment ideas at present, or that better opportunities exist.

  Comparison

  Compared with newly added MSFT, NOW remains relevant to the enterprise AI stack, but this list update shifts investor attention toward other higher-conviction ideas.

  Risks

  Insufficient proof of relevance to the enterprise AI stack, less-than-expected valuation re-rating, and reduced investor attention following removal from the list.

Key data

• Stocks added to the list this monthAMAT, DAL, MSFT, ORLY, VIK, UPSAll are high-conviction Buy ideas covered by Goldman Sachs analysts.
• Stocks removed this monthAVGO, DKS, JNJ, NOWThe report explicitly states that removal does not necessarily represent a change in analyst ratings; the relevant stocks remain rated Buy.
• Target list size20 to 25 stocksCovers the most differentiated fundamental Buy opportunities identified by Goldman Sachs Americas Research.
• List inception date2023-06-01The report states that this new investment list was launched on June 1, 2023.
• July hit rate versus the S&P 50062%The same table shows 57% versus the equal-weighted S&P 500, 43% versus GICS sectors, and 62% versus the GS Americas coverage universe.
• TTM hit rate versus the GS Americas coverage universe50%The long-term hit rate versus the GS Americas coverage universe is 52%.
• Second-quarter EPS growth hurdle22%The report states that, at that point, the second-quarter earnings season had largely cleared this high EPS growth hurdle.
• US second-quarter GDP growth1.5%The report states that this was below expectations, although consumer-related components remained encouraging.
• US July headline PCE inflation3.67% year over yearThis was 87 basis points above the 2.80% inflation rate before the February US-Iran war.

Impact & implications

For investors, the implication is that in a market characterized by high volatility, periodic reversals in the AI trade, and macro uncertainty, the risk of simply chasing a single theme is increasing, while stocks with company-specific catalysts, valuation support, and earnings visibility may be more attractive. The report distributes the additions across AI infrastructure, enterprise AI monetization, consumer experiences, compound growth, and earnings recovery, helping capture a broadening market rally.

Risks

• If AI and data-center spending falls below expectations, it could affect the performance of MSFT, AMAT, and other AI-related list stocks.
• Changes in the Federal Reserve interest-rate path would affect valuations across all stocks and have a more direct impact on rate-sensitive stocks such as WFC, CFG, IBKR, and TPG.
• Middle East conflict and disruptions in the Strait of Hormuz and the Red Sea could push up energy prices, compressing margins for airlines, cruises, logistics, and consumer-related companies.
• If inflation continues to pass through to core PCE, it could weaken the fundamentals of consumer-related companies such as DASH, EL, ORLY, TSN, and VIK.
• The list is not a portfolio and does not control for weights or diversification; investors should not treat it as a complete asset-allocation solution.
• Inclusion in or removal from the list does not equate to a rating change; investors who misinterpret list changes may overstate their rating implications.

What to watch

• Subsequent evidence of AI monetization, Azure growth, AI unit economics, and Copilot commercialization at mega-cap technology companies such as MSFT and AMZN.
• Continuation of wafer-fabrication-equipment demand, DRAM, advanced logic, and advanced-packaging capital spending relevant to AMAT.
• Whether the Federal Reserve hikes rates in 2026, or, as the report expects, keeps rates unchanged through 2027 before shifting to rate cuts.
• The impact of oil prices, diesel crack spreads, and disruptions in the Strait of Hormuz and Red Sea shipping on fuel-intensive industries.
• Whether core PCE remains moderate or faces renewed upward pressure from prolonged energy shortages.
• List stocks including TSN, TPG, DASH, XYZ, LOAR, COP, CWST, GLNG, and EL scheduled to report results in August.
• The performance of the equal-weighted S&P 500 relative to the market-cap-weighted S&P 500, and whether index correlations remain low.