Written by: Rita

On August 3, Goldman Sachs released the monthly update of the U.S. Conviction List, adding six stocks and removing four. The additions include Applied Materials (AMAT), Delta Air Lines (DAL), Microsoft (MSFT), O'Reilly Automotive (ORLY), Viking Holdings (VIK), and UPS (United Parcel Service), while Broadcom (AVGO), Dick's Sporting Goods (DKS), Johnson & Johnson (JNJ), and ServiceNow (NOW) were removed. The Goldman Sachs U.S. equity strategy team pointed out in their report that the AI momentum unwinding in July has shifted the market from extreme concentration to broader pricing. The S&P 500 equal-weighted index outperformed the S&P 500 index by about 435 basis points in July, and the correlation at the index level fell to a near ten-year low. Goldman Sachs believes the stock picking environment is improving, and the AI theme is spreading from chips and equipment to sectors such as consumer, aviation, and logistics.

MSFT and AMAT support AI computing power; four non-AI stocks bet on rotation

MSFT is the core target for AI moving from the training layer to the enterprise application layer. Analyst Gabriela Borges believes the AI revolution is shifting from training and infrastructure to “how to make AI work in enterprises,” and MSFT is in the best position with its 50 years of enterprise service experience. The fourth-quarter earnings report provided key validation points: Azure's growth accelerated under capacity constraints, AI unit economics improved, and evidence of Copilot monetization increased. Borges expects MSFT's earnings growth to accelerate from 12% in fiscal year 2027 to over 20% in fiscal year 2029. The target price is $640, corresponding to a 28 times price-to-earnings ratio.

AMAT complements the semiconductor equipment field. Analyst Jim Schneider believes AMAT has a competitive advantage in deposition and etching equipment, which are used to manufacture advanced logic chips and stacked memory. The global semiconductor manufacturing capacity shortage is a long-term demand driver, and wafer fabrication equipment spending growth expectations have been raised to over 35% by 2026 and are expected to continue through 2028. The target price is $645, corresponding to a 32 times price-to-earnings ratio.

The four newly added non-tech targets each have their logic. DAL represents the pricing power of the consolidated airline industry, with analyst Catie O'Brien expecting profit margins to expand by 300 basis points over the next two years. The structure of international and business travelers positions DAL favorably in a K-shaped economy, and its own refinery provides a hedge against fuel prices. UPS is at an inflection point for revenue and profit, with analyst Jordan Alliger believing the company has moved past low-margin Amazon business, network restructuring has reduced structural costs, and growth from small and medium enterprises, healthcare, and customers will drive annual revenue growth of 4% to 6% before 2028. The target price is $132, corresponding to a 15.5 times price-to-earnings ratio.

ORLY represents defensive consumption. Analyst Kate McShane believes the market's concerns about the impact of high oil prices on auto parts retail are overblown, and ORLY is gaining market share in both the DIY and DIFM markets, with lower overlap with competitors. The company has repurchased $3.1 billion in stock this year, with a record $1.5 billion repurchase in the second quarter. VIK bets on structural growth in the high-end cruise market; analyst Lizzie Dove believes its core clientele (high-income Americans aged 55 and older) is the fastest-growing and most wealth-concentrated group in the demographic structure, with a compound annual growth rate of capacity of about 9% from 2025 to 2028, the highest in the industry, with a target price of $120.

The four removed targets still maintain a buy rating

The four removed stocks still maintain a buy rating; their removal does not signify a negative judgment but rather that the committee believes there are more attractive allocation directions on the current list.

When NOW was removed, analyst Gabriela Borges had just reiterated a buy rating and raised the target price to $152 after its second-quarter earnings report. The removal of AVGO, DKS, and JNJ was also based on the committee's portfolio allocation consideration rather than fundamental deterioration. Goldman Sachs believes the design of the Conviction List is to maintain a selective mix of 20 to 25 buy-rated stocks, and removal is a normal operation of periodic rebalancing, with deletion not equating to bearishness.

Overall differentiation of the Conviction List, with concentrated catalysts in August

As of the end of July, the Conviction List contained 23 targets. The best performers in July were ConocoPhillips (COP) (up 15.9%), TPG (TPG) (up 17.7%), and Block (XYZ) (up 16.9%), all benefiting from rising energy prices, a rotation in the financial sector, and digital payment themes. The weakest performers were Celestica (CLS) (down 9.1%), Loar Holdings (LOAR) (down 15.1%), and Nextpower (NXT) (down 24.6%), all related to AI infrastructure and pressured in the momentum unwinding of July.

In August, several Conviction List targets will release their earnings reports, including Tyson Foods (TSN) (August 3), TPG (TPG) (August 4), DoorDash (DASH) (August 6), Block (XYZ) (August 6), Loar Holdings (LOAR) (August 6), ConocoPhillips (COP) (August 6), Casella Waste Systems (CWST) (August 7), Golar LNG (GLNG) (August 13), Applied Materials (AMAT) (August 14), Estée Lauder (EL) (August 19), Viking Holdings (VIK) (August 19). The options market pricing for AMAT's post-earnings single-day volatility is 18%, higher than the historical average of 6%, indicating that the market has fully factored in uncertainties about the performance of semiconductor equipment companies.

The market experienced a round of intense style switching in July, with AI momentum unwinding disrupting extreme concentration. Goldman Sachs' adjustments to the Conviction List reflect this change, with the newly added targets spanning six industries: semiconductor equipment, aviation, logistics, auto parts, cruise, and enterprise software, while retaining energy targets such as ConocoPhillips (COP) and Golar LNG (GLNG). The market has shifted from "AI or nothing" to "AI plus something."

Disclaimer: This article is a整理与解读 of third-party brokerage research reports (Goldman Sachs, August 3, 2026) by潮向研究, combined with整理 of publicly available market information. The ratings, target prices, earnings forecasts, and related judgments quoted in this article are all the opinions of the brokerage's analysts, only representing the views of their respective institutions, and do not represent潮向 Research's opinions, nor do they constitute investment advice. The market carries risks, and decisions should be made independently. This article should not be used as a basis for buying or selling any securities.