- AI will boost the U.S. economy, but its long-term impact is still uncertain.
- Goldman Sachs’ David Kostin estimates that AI could boost U.S. stocks by more than 14%.
- In a recent report, Goldman Sachs analysts shared 20 stocks with exposure to the rise of AI.
It’s no secret that the increasing adoption of artificial intelligence has sparked investor interest in this area.
But given the failure of highly hyped technologies like the Metaverse in the past, we have to ask how exactly AI can revolutionize the world.
While the long-term impact of AI adoption remains ambiguous and highly dependent on future features and deployment schedules, Goldman Sachs economist Joseph Briggs said in a July 5 report that AI will likely impact the U.S. economy. We were able to quantify the potential benefits of
“Generative AI, after its widespread adoption in the United States and other advanced market economies, could boost annual labor productivity growth by about 1.5 percentage points over a decade, ultimately adding up to 7% to annual global GDP. We found that it could % boost,” Briggs writes. report.
As proof, he pointed to the many industries that could soon adopt AI automation and enjoy the subsequent labor savings and resulting creation of new jobs.
Rise in AI Adoption Could Mean More than 14% Upside for US Stocks
The AI stimulus is clearly good news for the US stock market.
“Despite recent gains, potential AI-related productivity gains could lead to significant upside for S&P 500 earnings and stocks over the medium to long term,” said Goldman Sachs’ U.S. head. “While we estimate that there is some potential, there are still considerable uncertainties and risks,” he said. Stock strategist David Kostin.
As a practical matter, this productivity gain could lift the compound annual growth rate of S&P 500 earnings to 5.4% from Kostin’s current estimate of 4.9%. Additionally, the fair value of the S&P 500 could rise 9% from today’s levels.
goldman sachs
However, Goldman Sachs economists believe that estimates of the expected effects of AI in improving productivity will vary depending on the speed of AI adoption, future production capacity, and future labor mobility, and that AI will continue to spread across the world. It’s also difficult to predict exactly what the impact will be, Kostin said. stock market.
“Based on this range of productivity scenarios, we estimate that the S&P 500 fair value upside could be as small as 5% and as large as 14%,” Kostin said. wrote. “And if GDP and sales growth are accompanied by higher corporate profit margins, the potential upside could be even greater.”
Kostin also said potential policy restrictions, a high interest rate environment and an expected recession could prevent investors from fully pricing in the impact of AI on markets, at least in the short term. writing.
20 stocks poised to capitalize on the rise of AI
In the report, Goldman Sachs analysts shared 20 stocks across nine sectors exposed to increased adoption of artificial intelligence.
These 20 stocks also span three categories: One is the global hyperscalers, or “giant companies that are leveraging extensive computing infrastructure, especially in the cloud, to commercialize AI at scale.” Global manufacturers, or “manufacturers of semiconductors and related equipment needed to build AI technology”. Either AI is enhanced or companies are “using technology to accelerate their business.”
A full basket of names can be found below, along with each company’s ticker, sector, category, and analyst comments for each.
