The global co-head of Fixed Income, Currency and Commodities in Goldman Sachs Global Banking & Markets is offering a rare and specific look at exactly how the bank is currently positioned across asset classes.
In a new episode of the bank’s This Is the Markets podcast, Anshul Sehgal says that he has deployed capital in three sectors while keeping some dry powder in case of a market pullback.
“We want to be invested, but we’re back to a 7 on 10, waiting for better entry points to take it up again.”
According to Sehgal, he is long-term bullish on energy and defense, believing that the two sectors will benefit from geopolitical tensions.
“Energy security is a big thing. So we like energy. That’s where we’ve rotated some of our excess that we had deployed in tech. We think energy security, both because of AI and geopolitics, is going to be a dominant theme. Defense, similarly, none of this is going to change very much.”
But Sehgal highlights that the biggest play remains in tech, noting that he remains very bullish in the AI trade.
“None of these is as exciting an opportunity as AI is. AI is a generational thing. These are trades. So we’ve rotated some of our allocations in that manner. And we don’t really have much else. So we have like seven on 10 on tech, three on 10 on energy, two on 10 on defense and no fixed income.”
Looking specifically at hyperscalers, the Goldman executive says demand is exploding for AI services.
“But also coming into this earnings season, the demand for tokens has just exploded, which means the demand for cloud compute has just exploded. The market’s big worry was all of this AI CapEx, how will they recoup that? And again, if you’ve used any of the LLMs out there, they all basically time out now. That’s the extent of how much people are using these tools.
The US industry measures the cost of these tools in terms of how much it would cost to get the same amount of work done with humans. So this is a much bigger transformation in terms of how people are thinking about it. So all of this sort of accrues to the hyperscalers. It’ll probably accrue to new business models that are yet to be funded. But the hyperscalers are going to be part of this equation, as are the LLM providers.”
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