According to CNBC, Goldman Sachs has updated its “Conviction List – Directors’ Cut” for November, identifying five stocks with projected upside exceeding 70%. The top picks include Korean video game publisher Krafton and Swiss-French HR company Adecco Group, both with 92% upside potential, followed by UK hydrogen firm Ceres Power (79% upside), German online retailer Zalando (77% upside), and Chinese AI chipmaker Horizon Robotics (74% upside). The European committee added DSV, Prysmian, and Ceres Power while removing Atlas Copco, Repsol, and UCB, while APAC changes included adding Hon Hai, Samsung F&M, Guming, and PTC Industries while dropping Anta, Asics, Ryohin Keikaku, Zai Lab, and Fujitsu. This analysis examines whether these ambitious projections are realistic given current market conditions and company-specific challenges.
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The Execution Gap in Ambitious Projections
While Goldman’s analysis highlights compelling growth narratives, the projected returns between 74% and 92% represent exceptionally optimistic scenarios that require near-perfect execution. Krafton’s dependence on a single franchise—PlayerUnknown’s Battlegrounds—creates significant concentration risk despite its historical success. The gaming industry’s notoriously fickle consumer preferences mean that even successful publishers can see rapid valuation declines if they fail to consistently produce hit titles. Similarly, Adecco Group’s projected turnaround faces headwinds from a slowing global economy that could depress hiring activity despite the company’s internal restructuring efforts.
Hydrogen’s Commercialization Timeline
Ceres Power’s inclusion reflects growing institutional interest in green hydrogen, but the technology faces substantial commercialization hurdles. While the company’s partnership with Shell provides credibility, the hydrogen economy remains in its infancy with uncertain adoption timelines and regulatory frameworks. The 52% year-to-date share price appreciation already prices in significant future growth, making the additional 79% upside dependent on accelerated market adoption that may not materialize as quickly as anticipated. Hydrogen infrastructure development requires massive capital investment and faces competition from established energy solutions.
AI Chip Market Saturation Concerns
Horizon Robotics’ impressive 144% year-to-date performance and additional 74% projected upside occur against a backdrop of intensifying competition in the AI chip space. While the company’s European expansion and partnerships with Volkswagen’s Cariad and ZF Group are positive developments, they face established competitors like Nvidia, Qualcomm, and Mobileye with deeper resources and more mature technology stacks. The autonomous vehicle market itself faces regulatory uncertainty and technical challenges that could delay widespread adoption, potentially impacting demand for Horizon’s specialized chips.
E-commerce Transformation Headwinds
Zalando’s projected 77% recovery appears optimistic given the 25% year-to-date decline despite strategic acquisitions and market expansion. The About You acquisition integration risks and intense competition in European e-commerce create significant execution challenges. Online fashion retail faces margin pressure from logistics costs and return rates, while consumer spending weakness in key European markets could further dampen growth prospects. Goldman’s analysis may be underestimating the structural challenges facing pure-play e-commerce platforms in the current economic environment.
Regional and Sector Concentration
The geographic and sector concentration of Goldman’s highest-conviction picks introduces additional risk factors. Three of the five top-upside selections operate in particularly volatile sectors—gaming, AI chips, and hydrogen technology—that are susceptible to rapid sentiment shifts. Additionally, the Asian focus of several selections exposes investors to regional geopolitical tensions and regulatory uncertainties, particularly concerning Chinese technology companies. While diversification away from U.S.-heavy portfolios makes strategic sense, the selected alternatives carry their own unique set of risks that may not be fully priced into current valuations.
