Better-than-expected results late last month from some of the biggest technology companies using artificial intelligence signal an opportunity for investors to pick up shares in the cohort after the recent slump, according to a group of analysts at Goldman Sachs.

The once-hot trade that boosted the broader market over the last two years hit multiple snarls in 2025. Chipmakers and AI-linked stocks saw a major hit in January on the news of China’s DeepSeek, which threw into question the necessity for the billions of dollars in spending pledged to building out AI systems. More recently, President Donald Trump’s trade war sparked concern over an economic slowdown, again stoking fears that big tech companies will trim spending on AI, while putting large levies on China has stoked fears of disrupting supply chains for chipmakers.

“It is fair to say there is a lot of pessimism in this theme,” analysts led by Louis Miller wrote in the note dated May 2. “We consider this an opportunity to buy the dip in AI.”

Earnings results from the likes of Alphabet Inc., Microsoft Corp. and Meta Platforms Inc. have improved sentiment toward the group, which is trading at a relative discount after weakness in the first few months of the year. Alphabet’s report showed strong margins despite concerns about AI costs, while Microsoft indicated solid execution and consistent demand signals in an uncertain backdrop.

“All AI themes are cheaper than they were in the beginning of this year, as well as last year,” Miller wrote. “Looking at long-term earnings growth, the different baskets look cheaper to previous AI years, closer to pre-ChatGPT levels (except for software, that tends to be more rate sensitive)

“Looking at our Broad AI basket’s performance relative to its earnings, the group continues to be cheap while earnings prove to be steady,” he said.

Goldman’s US TMT AI Basket, which consists of companies that are pursuing artificial intelligence or can help enable new technologies, underperformed the broader market by 19% in the summer amid concerns about return on investment before rallying to a high in January. So far in 2025, the AI Basket has sold off more than 20% following DeepSeek and Trump’s trade war before paring some of those losses in the last two weeks.

At the same time, sentiment is also improving in the broader market, which is “unwinding the tariff risk factor,” according to the note. Analysts expect the next month of economic data to show few signs of impact from tariffs, and anticipate US consumers continuing to spend until prices increase or unemployment rises, which aren’t on the near-term horizon.