Although the current market has completed a certain degree of de-risking, it is still far from a true &#34;surrender-style&#34; exit—this means that downward pressure has not yet cleared, and volatility may continue.Lee Coppersmith, Managing Director at Goldman Sachs, warned in a recent report that the U.S. stock market is showing an increasing number of signs of weakness. The S&amp;P 500 index fell below the 200-day moving average last week, currently around 6,500 points, and the market has entered a negative Gamma zone, where options flow will amplify both buying and selling pressures, significantly widening the distribution range of price fluctuations.In this context, Coppersmith pointed out that AI-related stocks and the &#34;Mag7&#34; have become the few areas in the market where holdings are still close to historical highs. If investors need to raise cash further or reduce risk exposure, the AI complex will become one of the last and largest potential sources of sell-off.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a01bac5f-43e1-49b4-abb0-274827f01185.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a01bac5f-43e1-49b4-abb0-274827f01185.png"/><h2>Oversold? Data Does Not Support It</h2>&#34;Are we already oversold?&#34;—this is the most frequently asked question in the current market, and the data does not provide a comforting answer.From a breadth perspective, currently only about 14% of S&amp;P 500 constituents have reached oversold levels, while this figure exceeded 50% in April 2025 and also reached over 40% in the third quarter of 2022. A tactical rebound may occur, but the overall pattern does not exhibit the characteristics of a &#34;surrender&#34; bottom.The Goldman Sachs Sentiment Indicator has dropped from +1.40 at the beginning of January to the current -0.32. Although this is a meaningful reset, it is still far from the levels corresponding to historically significant market lows. Based on experiences from various stages in 2009, 2011, late 2018, and April 2025, a sustained bottom typically appears around -2 standard deviations or lower. The current reading indicates that investors are no longer aggressively bullish, but have not yet shifted to underweight positions—de-risking has begun, but it is difficult to say it is complete.<h2>Systematic Funds Have Moved, but Risks Remain</h2>At the level of systematic funds, adjustments have already started. Commodity Trading Advisors (CTAs) have flipped to net short in the U.S. market, indicating that initial mechanical selling pressure may have largely landed. However, if the market enters a more sustained downtrend, CTAs still have room to continue adding to their short positions.Meanwhile, volatility control funds and risk parity funds have not yet significantly reduced their exposures. Coppersmith estimates that if volatility continues to rise or macro shocks persist, these two types of funds will constitute additional potential supply pressure.In the volatility market, mechanisms have switched. VIX positions have shifted from net short to net long, maintaining buying pressure this week—indicating that the market has transitioned from &#34;under-hedged&#34; to &#34;actively purchasing protection.&#34; Goldman Sachs' prime brokerage data also shows that short positions are at a five-year high, but are concentrated in macro products and indices, while short covering at the individual stock level remains limited<h2>Cyclical Stocks Face Continuous Liquidation, AI Holdings Stand Out</h2>From the perspective of sector flow, cyclical stocks have been under sustained pressure. Hedge funds have net sold non-consumer cyclical sectors such as energy, materials, industrials, finance, and real estate for nine consecutive weeks, with the pace of selling significantly accelerating since late February. The cumulative net buying scale has almost completely reversed, and the long-short ratio in these sectors has dropped to 1.68, below the year-to-date high of 1.89 in January, marking the lowest level since May 2025.In stark contrast, AI-related stocks (corresponding to Goldman Sachs GSTMTAIP index) and Mag7's net exposure remain close to their respective historical highs. The net exposure of the U.S. software sector, which hit a historical low at the end of February, has actually rebounded in recent weeks, primarily driven by short covering—despite the fact that short positions in this sector remain heavy year-to-date.<h2>AI Complex: The Next &#34;Last Bastion&#34; to Be Unwound</h2>Based on the above signals, Coppersmith concludes: The de-risking phase has already occurred, and the next direction of the market depends on what investors choose to sell.After most sectors have experienced systematic reductions, the AI complex has become the current market's &#34;last bastion&#34; where both position size and unrealized gains are most concentrated. If the market requires further financing or risk reduction, the AI sector will logically be the most straightforward source for selling.Goldman Sachs concludes: Cyclical stocks have become increasingly attractive when news improves; while the AI sector, at this stage, resembles a &#34;liquidation option&#34; for hedging or financing.

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Goldman Sachs stated that although the U.S. stock market has begun to de-risk, it has not yet triggered a "capitulation" exit, and downward pressure remains unresolved. Currently, the S&P 500 has entered a negative gamma zone, leading to increased volatility. Data shows that the level of overselling is far from historical lows, and systemic funds still have potential selling pressure. It is worth noting that cyclical stocks have been continuously liquidated, while the AI sector and "Mag7," which are at high positions, have become the last bastion. If the market requires further financing for risk aversion, the AI complex may face a sharp correction

- Goldman Sachs warns of increasing vulnerabilities in the U.S. stock market, citing that the S&P 500 has fallen below its 200-day moving average, with significant price volatility expected.  
- While systematic funds have begun to adjust positions, the data indicates that selling pressure remains, particularly in cyclical stocks, whereas AI-related stocks show high holdings.  
- The next phase in the market will depend on whether investors choose to sell AI stocks, which have become a potential source for further cash raising or risk reduction.

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It's not yet the "surrender" moment! Goldman Sachs warns: AI may be the final source of sell-off