Goldman Sachs estimates 28% chance of sharper market pullback from AI scare trade

Goldman Sachs raised its estimated probability of a larger stock market drawdown from 23% to 28%, citing declining equity momentum and elevated options activity driven by AI disruption fears. When the S&P 500's momentum has dropped more than 4.3%, the index has historically fallen an average of 10% over the following 12 months. Piper Sandler technical analysts flagged similar warning signs. The AI "doom basket" of 55 large-cap stocks punished by AI headlines continues to trade at distressed levels, though Nvidia's strong earnings provided some relief.

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