Goldman Sachs believes that artificial intelligence technology could help drive S&P 500 profits over the next 10 years.
Goldman’s senior strategist Ben Snider said, “Over the next 10 years, AI could increase productivity by 1.5% per year. And that could increase S&P500 profits by 30% or more over the next decade.”
The emergence of ChatGPT has spurred a firestorm of enthusiasm for AI technology and the possible disruptions to the regular lives of many. It has injected fresh interest among investors enthusiastic for a fresh driver of profit-margin growth at a time when rising borrowing prices and supply chain issues have tempered optimism.
Snider said, “A lot of the favorable factors that led to that expansion of S&P 500 earnings seem to be reversing. But the real source of optimism now is productivity enhancements through artificial intelligence.”
Snider added, “It is clear to the most investors, immediate winners are in the technology sector. The real question for investors is who are going to be winners down the road.”
He expressed, “In 1999 or 2000 during the tech bubble, it would be very hard to envision Facebook or Uber changing the way we live our lives.”
Snider recommended that investors should consider spreading their US equity investments in cyclical and defensive sectors.