• Goldman Sachs (GS)' risk-appetite indicator has turned negative for the first time since April, hitting its lowest level since the early days of the Iran war, according to people familiar with the matter.
  • Investors are dumping AI stocks and flocking to U.S. Treasurys, even as inflation runs hotter than expected, while South Korea's Kospi fell 4% intraday and AI startup Elice plunged more than 30% on its trading debut.
  • The move underscores growing doubts about whether massive AI infrastructure spending can generate sufficient returns in a higher-for-longer interest-rate environment.

A Sharp Shift in Sentiment

Goldman Sachs' latest analysis, detailed in an October 19 client note, shows its Risk Appetite Indicator dropping sharply below zero. A separate sentiment-and-positioning gauge fell to the 46th percentile, its lowest reading since April. Analyst Christian Mueller-Glissmann highlighted stronger fixed-income flows, increased positioning in gold and the yen, and continued defensive stances among systematic investors.

The warning comes despite Goldman's own strong third-quarter results, reported on October 13, which showed net revenue of $18.68 billion (up 23% year over year) and diluted earnings per share of $17.01. Yet the bank's market call reflects a broader reassessment of risk, not its own earnings trajectory.

AI Darling Elice Stumbles Out of the Gate

In South Korea, AI-cloud provider Elice saw its shares open at 63,600 won on the Kosdaq, roughly 30% below its IPO price of 90,500 won. The stock touched an intraday low of 61,000 won, down about 33%. The disappointing debut came despite a retail subscription rate of about 400 times and institutional demand of nearly 389 times the shares on offer.

The weak listing contrasts with Elice's recent financial performance: first-half revenue tripled to 34 billion won, and operating results swung to a 10 billion-won profit from a 3.5 billion-won loss a year earlier. The IPO raised 201.1 billion won (approximately $150 million), most of which is earmarked for portable modular data centers.

South Korea Feels the Chill

The Kospi fell more than 4% intraday, with some reports putting the decline at as much as 4.8%, as semiconductor heavyweights Samsung Electronics (005930.KS) and SK Hynix (000660.KS) sold off. Foreign selling and concerns over debt-funded AI investments amplified the downturn. The headline's "4%" figure should be viewed as a snapshot, not a closing level.

"Investors are questioning how quickly massive AI spending can pay off," said one Seoul-based analyst, who spoke on condition of anonymity. "The market is demanding a higher risk premium for anything tied to AI infrastructure."

Beyond One Company

The retreat extends beyond Elice. Reuters (TRI) reported shelved or postponed listing plans for Nvidia (NVDA)-backed Australian firm Firmus, Blackstone (BX)-backed AirTrunk's proposed Singapore REIT, and SoftBank (9984.T) subsidiary SB Energy's U.S. offering. These parallel developments point to a wider reassessment of infrastructure funding and IPO demand.

Goldman's note also flagged that its own investment-banking fee backlog declined sequentially, and it identified changing trade policies, potential tariff increases, and worsening Middle East conflict as risks to underwriting activity.

What to Watch

In the near term, Goldman's Mueller-Glissmann expects volatility to remain elevated, with systematic strategies still defensively positioned. The bank reported approximately $5.1 billion of September outflows from momentum ETFs and inflows into defensive sectors such as utilities, telecoms, and infrastructure.

For new AI listings, Shenton Research's Ke Yan expects investors to demand a higher risk premium until customers demonstrate they can fund their computing commitments. That implies continued pressure on IPO valuations and financing terms.

Elice and Goldman Sachs did not respond to requests for comment.

Correction: An earlier version of this article misstated the exchange on which Elice trades. It is the Kosdaq, not the Kospi.