Goldman Sachs suggests "selectively" buying the dip in AI assets after record hedge fund selling, but remains cautious on rebound prospects due to ballooning capital expenditures and uncertain returns. Goldman noted that AI-related assets experienced a sharp sell-off this week, with its hedge fund VIP basket recording its worst single-day performance since 2011 on Thursday, and Goldman's prime brokerage also seeing the largest tech stock sell-off since September 2024. Although the reduced crowding in AI trades has created buying opportunities for some US tech stocks, Goldman strategist Louis Miller believes the rationale for buying the dip is that earnings expectations for leading AI companies remain stable. However, continuously inflating capital expenditures (e.g., Meta raising its 2026 capex guidance floor to $135 billion, with its stock falling 7% on Thursday) and unclear returns on investment leave Goldman with "limited conviction" on the market's direction.