Goldman’s One-Delta Desk Sees S&P 500 and Nasdaq Poised for a Fresh Breakout
TREE NEWS reports: Rich Privorotsky, who heads Goldman Sachs’ One-Delta trading desk, believes the market is standing on the edge of a new breakout in both the S&P 500 and the Nasdaq, driven by a deep productivity shift from AI agents. In a fresh report, he argues that despite unfavorable seasonality, elevated real rates and lingering geopolitical tail risks, the current level of caution in sentiment and positioning is itself an upside catalyst.
“People tend to under-participate in these moves because everyone spends September explaining why it can’t happen,” Privorotsky wrote, framing his view around the classic “Wall of Worry” — a market that climbs while investors remain skeptical.
Bad News Is Priced In, Low Positioning Is Fuel
Privorotsky walks through the forces weighing on sentiment: an abrupt narrative rotation in AI, broadly cautious positioning, midterm elections, and the triple disturbance of oil prices and interest rates. His conclusion is that these risks are already fully — even excessively — discounted. He acknowledges the market is in the seasonally weakest half-month window, that real rates remain high, and that geopolitical risks are real. But in his framework, those very factors explain why positioning and participation are low, rather than acting as decisive barriers to a rally.
Agentic AI: Removing Friction, Unleashing Productivity
The core of his argument rests on the “Inference Economy” and the mass adoption of agentic AI. Citing Muse as an example, he says this is not the endpoint but the starting gun for a wave of similar products that will reshape how individuals and businesses produce, communicate and transact.
AI “super users” already had similar capabilities, but the technical barriers and maintenance costs kept ordinary users out. As large enterprises take on the underlying responsibilities of security, infrastructure and distribution, that is changing — and “a great deal of friction and rent extraction will disappear from the economy.” In his view, this is a productivity leap: capital reallocating toward more efficient uses, with the inefficient drag on growth dissipating. His overall judgment is that the effect on broad equities is positive and structurally disinflationary.
CPU Supply Chain Leads, But the Dividend Is Spreading
Privorotsky notes the most violent expression of the inference economy remains concentrated in the CPU supply chain, but he expects the market’s focus to broaden rather than narrow. Traditional AI capex names still offer value, albeit with lower beta, while productivity gains should diffuse into a wider set of industries.
He singles out TSMC, whose shares sit at highs and appear coiled for a breakout, calling it a signal from the global hardware “mothership.” He also flags a notable divergence: financials have weakened even as tech strengthens, suggesting second-order effects are already appearing.
Key Takeaways for Investors
- Positioning, not fundamentals, may be the near-term driver. Low participation and cautious sentiment can fuel sharp upside moves when catalysts arrive.
- Agentic AI is a structural theme, not a trade. The productivity and disinflationary effects could play out over years, favoring equities as the cleanest expression.
- Semiconductors and hardware remain the epicenter. TSMC’s price action is a bellwether for the entire AI supply chain.
- Watch second-order effects. The divergence between tech strength and financial weakness may signal where the next rotation leads.
- Risk factors persist. Seasonality, real rates and geopolitics are not gone — they are simply, in this view, already reflected in prices.
In short, Privorotsky’s message is that the agent revolution has arrived, the market is beginning to price a major structural shift, and the strong buying in tech and semiconductors is the clearest evidence of that expectation.
