Goldman Sachs says the recent surge in artificial intelligence stocks is driven by the real potential of new technologies, not just hype. Generative AI, a type of AI that can create new content and interact with humans in natural language, has seen a significant uptick in interest since the release of his ChatGPT late last year. Investor enthusiasm for the technology has boosted exchange-traded funds such as Global X Robotics and Artificial Intelligence this year. In addition to naming stocks exposed to the subject, Wall Street analysts say investors are optimistic about the technology as it has the potential to improve personal and professional productivity around the world. said he was paying attention to “AI is probably not in a hype cycle,” said Kash Langan, senior Goldman Sachs. is low,” he said. A software equity research analyst said in a July 5 client note: He said this is because the development is being led by some of the world’s most influential tech companies like Microsoft and Google, rather than startups. This contrasts with previous technology cycles that have met with resistance from incumbents and led to extended implementation periods, they added. Rising Valuations While many investors embrace the revolutionary nature of this technology, others are skeptical about the rising valuations being charged for companies in this space. Goldman analysts dismissed some of those concerns, saying companies like Nvidia and Microsoft were still trading at reasonable multiples. “Bubbles are usually defined as corporate value relative to attention or clicks, responsive market dynamics, or volatility, as opposed to a fair multiple to net income,” said Eric Sheridan, a senior internet equity analyst at the investment firm. It means pure euphoria as a valuation driver.” Bank. Nvidia’s stock surged 190% in the first half of 2023, bringing the 30-year-old company’s market cap to over $1 trillion. The milestone was achieved after the company revealed that first-quarter sales exceeded analyst expectations. Additionally, NVIDIA expects second-quarter revenue to be around $11 billion, which he said is more than 50% above Wall Street’s forecast of $7.15 billion. More broadly, Sheridan said, companies will begin to realize the productivity-enhancing potential of AI internally within the next six to 12 months, and external businesses will see his applications emerge within three years. I predicted. For now, the analyst said productivity benefits are concentrated at the developer level. Still, software giants Salesforce and Adobe said they are gearing up to offer solutions that will benefit sales, marketing and customer support professionals by 2024. Stock analysts exposed to AI also said Microsoft, Alphabet, and Amazon are commercializing AI on a large scale, leveraging their vast computing infrastructures. They added that Nvidia, Marvell Technology, TSMC, Foxconn Industrial Internet, Unimicron Technology and NYPCB are important to the AI theme as they manufacture critical semiconductors and related equipment needed to enable the technology. rice field. For example, sales of Marvell’s optical PAM4 digital signal processor, which enables high-bandwidth optical connectivity for AI platforms, were critical to the company’s latest quarterly earnings, he said. According to Goldman Sachs, companies such as Meta Platforms, Salesforce, Adobe, ServiceNow, Intuit, Capgemini, Pearson, London Stock Exchange Group and Relay Therapeutics were also exposed to AI themes. It says. Analysts at investment banks said the firms are using AI to streamline their operations. For example, Meta Platforms has invested in AI to enable content moderation in social media networks.
