Beyond CPI: Goldman Says Two AI Catalysts Next Week Matter More, May Spark a 'Right-Tail' Rally

As U.S. stock investors hold their breath for inflation data, Goldman Sachs strategist Lee Coppersmith is looking in another direction—he believes that in the coming week, AI is the core variable that will determine market direction.

The launch of OpenAI's flagship new model Astra, the Goldman Sachs Communacopia+ Technology Conference (OpenAI will take the stage Tuesday at 9:30 a.m. Pacific Time), and extremely compressed positioning levels together create a "coiled spring" market setup. In his latest research, Coppersmith points out that the market has three paths forward: inflation data, the OpenAI Astra launch, and whether the current "Goldilocks" pricing, which already embeds high growth optimism, can persist—any one of these could move the market.

On the market structure front, U.S. fundamental long/short hedge fund net leverage sits at only the 4th percentile of the past year, semiconductor implied volatility (VXSMH) has plunged from about 65 in July to 36, nearly halved; Goldman's tech long/short momentum basket is still down about 50% from its late-June peak—all this while the straddle index is at 500% this week. In other words, the market is pricing volatility unusually complacently, yet faces a dense cluster of catalysts.

Extremely Light Positioning, Options Market Underpricing Risk

Current market positioning provides ample room for potential moves. According to Goldman's proprietary data, U.S. fundamental long/short net leverage is at the 4th percentile and gross leverage at the 27th percentile, a stark contrast to two months ago. Despite some recent rebuilding, overall positioning remains extremely light.

The options market reflects the same de-risking process. Semiconductor volatility has undergone a major reset, with VXSMH falling from about 65 in July to 36, back to levels seen in early 2026. Yet the market has not turned bearish—the average put/call skew for S&P 500 constituents remains near three-year lows. This means the options market has compressed the implied range of outcomes while pricing in almost no downside risk.

Coppersmith believes that under these dynamics, holding "right-tail" exposure through options offers attractive value. Light positioning, compressed volatility, and a dense catalyst calendar create an asymmetric risk-reward structure.

AI Catalysts Coming in Waves, Goldman Sees Upside to Capex

In the coming week, the AI narrative will face intense scrutiny. The Goldman Sachs Communacopia+ Technology Conference brings together 40 public and private companies, with core topics focused on AI spending, returns, and competitive dynamics through 2027 and beyond. Goldman's research team maintains its view of upside to AI capital expenditure, expecting compute demand to continue exceeding supply through 2028.

Meanwhile, Goldman's tech long/short momentum basket has cumulatively fallen about 50% from its late-June peak, and even Friday's nearly 7% rebound failed to reverse the decline. This has been costly for investors trying to time the recent sector rotation. Coppersmith notes that this pain is precisely the opportunity—it is because re-entering is not easy that we have 4th-percentile net leverage and halved semiconductor volatility.

At the single-stock level, Micron and SanDisk are showing signs of breaking out of recent downtrends after a summer of consolidation.

Macro "Goldilocks" Conditions Fragile, Growth Optimism Fully Priced

Despite light positioning, macro upside is not ample. Goldman's research team notes that further improvement in risk appetite requires lower rates rather than stronger growth expectations. Currently, the growth component of Goldman Sachs Risk Appetite Indicator (RAI) is near the top of its post-pandemic range, while the monetary policy component remains negative.

The ideal "Goldilocks" scenario is: the reopening of the Strait of Hormuz drives energy prices lower, combined with further cooling in U.S. inflation. But with growth optimism already heavily embedded across asset classes, any growth disappointment or new geopolitical shock leaves very limited buffer.

Earnings and valuation dynamics also warrant attention.

This year, tech sector earnings support has come mainly from AI capex and mark-to-market gains on equity investments, and investors' willingness to pay higher valuations for increasingly cyclical AI earnings continues to decline, with rising leverage in the AI ecosystem adding further pressure. Goldman's strategy team expects equity Sharpe ratios to decline going forward, but if rates fall while growth stays resilient, it would support valuation repair—especially as AI applications extend from infrastructure buildout to broader use cases.

Hedging Approach: Long Broad AI, Short Non-AI S&P

On the hedging front, Coppersmith offers a concrete framework: downside protection on the S&P 500 ex-AI index (SPXXAI) provides highly attractive convexity. That index has strengthened over the past two months as investors were forced to rotate out of AI and remains near all-time highs—once money flows back into AI, it will face reverse pressure.

A pair trade of long the Goldman Sachs Broad AI Index (GSTMTAIP) and short SPXXAI is, in Coppersmith's view, attractively valued at current levels.