Goldman Sachs announced its first quarter results on Monday, surprising analysts with outstanding results. The Wall Street giant's profits rose 28% year over year, helped by a 32% rise in investment banking fees. In a follow-up conference call with the firm's analysts, CEO David Solomon offered some insight into the growth of Goldman's business, and his comments likely will be well-received by AI bulls. It seems that it was
He said Goldman is already working with clients to discuss how and when new technologies will impact their businesses, labor markets and regulatory environments. Mr. Solomon also said he believes there will be strong demand for AI-related restructuring and infrastructure projects, as well as financing, which will be a tailwind for Goldman's business in the long term.
“We see a very constructive opportunity set moving forward with our clients as people reposition their businesses,” he told analysts. “We're talking about unprecedented levels of scale,” he told analysts. “I think that opportunity is … not just a quarterly thing, but something that spans the next five to 10 years. We're very focused on that and we're working very hard on it.”
Solomon also pointed out that it's not just companies that are driving the rise of AI; governments are also heavily involved, with “huge investments being made to bring infrastructure to the region.”
Government spending on AI is something tech bulls like Erika Klauer, technology equity portfolio manager at Jennison Associates, have talked about before. luck It should help boost some major AI stocks for years to come. “[Nation-states] They want to have their own version of ChatGPT, with their own language, their own archives, and their own training on cultural nuances,” she explained last month. “That's led these governments to explore their own AI initiatives. This is a great opportunity.”
The AI opportunity is so big and so widely talked about that analysts asked Goldman's Solomon about comparisons to the dot-com era of the late '90s and early 2000s on the firm's conference call Monday. did.
The CEO declined to comment on the comparison, but noted that big tech companies have dominated AI operations so far. “We have a significant market capitalization driven by large platforms that have a significant competitive advantage in terms of scaling these technologies,” he said.
Solomon also said that Goldman, like many large companies, is expanding its use of AI internally. The CEO sees a “huge opportunity” for the technology to improve the company's productivity and efficiency, but says, “As with any emerging technology, a thoughtful approach and a keen eye for risk management will be key.” It will be,” he added.
Charles Schwab CEO Walter Bettinger II also kept the risks of using AI in mind when answering questions from analysts on Charles Schwab's conference call on Monday. He believes that AI is a huge opportunity for the economy, customers and businesses, but there are also significant risks to consider, such as AI's tendency to hallucinate, and the hype may be a little too much.
Bettinger said that companies, especially financial companies, need to do a lot of work with regulators before they can use AI “without the inherent bias that we sometimes see.”
“If we switch to something like generative AI, I think it will take a while for that technology to mature. I know it may not match the hype that some are saying, but… “I think the technology needs to mature,” he added.
