With artificial intelligence The boom has driven US stocks to new highs this year, and the overall market capitalization of US stocks has increased by trillions of dollars.
But Goldman Sachs Analysts wrote in a report on Sunday that the U.S. stock market may have already priced in most of the potential gains from artificial intelligence technology.
Investors over-predict
Goldman Sachs analysts say that, historically, during major technological innovation booms like those in artificial intelligence , investors tend to over-concentrate and over-anticipate.
“Individual companies may achieve remarkable profit growth over a period of time. But such growth may be correct for a particular company, but it may not be correct for the market as a whole.”
Goldman Sachs stated that when investors have high expectations for too many players in the AI supply chain, hoping they will all reap huge profits, "this could mean overly high revenue and profit growth expectations."
Goldman Sachs analysts believe the second risk in the market is the assumption that the early profits from the AI boom will continue. They point out that while AI technology can indeed boost corporate productivity in the early stages, these returns will typically erode over time due to industry competition and new investments.
The market has already factored in most of the potential gains.
Goldman Sachs released this report at a time when the US stock market was engaged in a heated debate about whether the AI-driven rally was in bubble territory. Major US stock indices had been breaking record highs this year until a sharp pullback earlier this month.
Goldman Sachs analysts estimate that artificial intelligence could generate approximately $8 trillion in additional revenue for U.S. companies —although this revenue estimate has a wide range: potentially between $5 trillion and $19 trillion. The analysts did not set a timeframe for these increases.
Goldman Sachs stated in its report: "These benefits are sufficient to justify the current and anticipated levels of investment spending."
However, they added that since ChatGPT's inception, the market capitalization of AI-related companies has increased by more than $19 trillion , suggesting that the market may have already absorbed most of the potential upside for AI.
They added that while the market should have priced in the benefits of artificial intelligence in advance, current valuations are "much higher than the macro level."
Goldman Sachs analysts believe the current risk is that while such high valuations can be sustained during periods of strong economic growth, investors often end up paying the price once economic growth slows or the cycle turns.
Could US stocks continue to rise?
Despite numerous warnings, Goldman Sachs analysts did not call the strong growth driven by AI a "bubble."
They added that markets tend to price in future gains in advance, so even after such a significant rise, US stock valuations may still continue to rise.
They wrote, "As long as the economic and AI investment boom stays on track, we believe the market is more likely to continue to be more optimistic."
Recently, more and more investors have begun to weigh whether large-scale investments in artificial intelligence will bring real returns or simply repeat past bubbles. The market remains uneasy about the sky-high valuations of tech stocks.
Last week, JPMorgan Chase The warning states that its biggest concern about the current hot AI market is that it could repeat the boom and bust of the dot-com bubble in the late 1990s.
“Relatively large sums of money have already been invested without a clear understanding of how the application curve will work. This seems to be the problem with the development of artificial intelligence today,” JPMorgan analysts wrote.
(Article source: CLS)
