Global investment bank Goldman Sachs has dramatically overhauled its US Conviction List. In this update, the bank removed semiconductor company Broadcom — a longtime fixture on the list — and added Microsoft (MS) as a new entrant. The move is widely interpreted as reflecting a market shift in focus from “AI infrastructure buildout” to the “monetization phase.”
The overhaul came through the August update, and according to reports from Investing.com and 24/7 Wall St. on Monday (local time), Goldman Sachs made sweeping changes to its “US Conviction List.” Six companies were newly added: Microsoft, Applied Materials, Delta Air Lines, O’Reilly Automotive, Viking Holdings, and UPS.
Goldman Sachs’s particular emphasis on Microsoft is evident in its price target adjustment. The bank maintained a “Buy” rating on Microsoft while raising its price target from $610 to $640. Given that Microsoft shares closed at $487.65 on the day, achieving the target would imply upside of more than 30%. Goldman Sachs analyst Gabriela Borges explained the rationale for the swap, saying, “The AI revolution is now moving past the phase of training models and building infrastructure into the phase of actually applying AI to enterprise workloads.”
Microsoft’s recent stock performance appears to have bolstered Goldman Sachs’s confidence. The company has been on a winning streak since its latest quarterly earnings release. According to reports, Microsoft shares surged more than 11% in just three trading sessions following its earnings announcement on July 29. The driver: quarterly revenue of $90 billion (approximately 128.9 trillion won) and 18% year-over-year growth, both beating Wall Street expectations. Notably, Microsoft’s cloud platform Azure surpassed $100 billion in annual revenue (approximately 143.3 trillion won), with revenue growth reaching 43%.
Goldman Sachs characterized the earnings report as a “turning point.” Analyst Borges noted it was “a meaningful inflection point that reverses the previously sluggish trend.” She also projected that Microsoft’s earnings per share (EPS) growth could accelerate from 12% in fiscal 2027 to over 20% by fiscal 2029.
For the other new additions, Goldman Sachs highlighted distinct demand drivers for each industry. For Applied Materials, a key semiconductor manufacturing equipment maker, the bank noted the company can continue expanding market share with both memory chip makers and foundries (contract chip manufacturers). The company’s strength in core process technology was cited as the basis for this view.
Delta Air Lines was selected for its “pricing power.” Goldman Sachs described Delta as “the company that best leverages its ability to lead airfare pricing,” and expects operating margins to expand by 3 percentage points over the next two years.
For O’Reilly Automotive, an auto parts distributor, the bank positively noted the company’s steady market share gains in the professional repair segment. For logistics giant UPS, the assessment was that the company has ended three consecutive years of weak performance and is entering a recovery phase with improving revenue and profits.
Luxury cruise operator Viking Holdings also made the list. Goldman Sachs cited the company’s differentiated itineraries and a loyal, affluent customer base as key strengths, suggesting these advantages can more than offset any softness in the cruise industry cycle. According to reports, analyst Ridge Dove said the company’s strengths “will be more than enough to offset any near-term softness in the cruise market.”
Conversely, four companies were removed from the list in this overhaul: Broadcom, Dick’s Sporting Goods, Johnson & Johnson, and ServiceNow. In other words, while attention is being reallocated from the “AI infrastructure” axis toward “companies with visible monetization,” some existing holdings — including healthcare and software names — have been pushed down in priority.
The implications for investors are relatively clear. First, Goldman Sachs’s repositioning of Microsoft at the core signals a growing emphasis on the earnings of companies in the “application and transition” phase of the AI cycle. Second, the inclusion of names like Applied Materials — a semiconductor supply chain equipment play — suggests that within AI investing, both “infrastructure to monetization” and “supply chain to real demand” may move in tandem.
That said, market observers note that a single investment bank’s list change doesn’t directly dictate stock prices across the board, but rather can serve as a catalyst for realigning already-announced earnings momentum and expectations. Indeed, as reported, Microsoft’s stock reacted quickly in the days following its earnings release, and Goldman Sachs’s price target hike is aligned with that short-term momentum.
Also noteworthy is the inclusion of sectors without direct AI exposure, such as Delta Air Lines, O’Reilly Automotive, UPS, and Viking Holdings. This suggests the list isn’t built on a single “AI theme” thesis alone — rather, profit-margin improvements, pricing power, and recovery potential across industries remain core to the investment framework.
Goldman Sachs’s US Conviction List overhaul came within the schedule of its August update, and the changes offer a window into where market attention is shifting. The core message from Goldman Sachs is ultimately that the center of gravity has moved from “AI infrastructure” to “real-world application.” Investors will likely watch each new addition’s upcoming earnings and guidance as the test of whether Goldman Sachs’s new portfolio construction holds up.