Goldman Sachs trader: Easing tensions in the Middle East are prompting US stock market investors to shift focus to sectors beyond AI.

Goldman Sachs traders, including Lee Coppersmith, wrote in a report to clients that investors are beginning to realize there may be some cyclical stocks with little relation to AI that are undervalued. Given the fatigue in the AI frenzy, investors are positioning for these stocks to catch up. "With the war ending, the market will overlook upcoming inflation data and gradually eliminate rate hike expectations, allowing us to shift back to betting on rate cuts," said Joe Gilbert, portfolio manager at Integrity Asset Management. "This will benefit small companies, cyclical stocks, and bonds."