Goldman Sachs anticipates strong performance in AI, rejects bubble concerns

Goldman Sachs (NYSE:GS) has recently reiterated its stance on the substantial growth potential of the artificial intelligence (AI) sector, dismissing concerns of a possible AI bubble, despite the significant surge in AI market interest and resulting spike in tech stocks. The financial giant’s Chief Global Equity Strategist, Peter Oppenheimer, affirmed this perspective, stating “We are convinced that we are still in the early phases of a new technology cycle, which is poised to deliver additional strong performance.”

The recent upswing in AI stock prices led some analysts to draw parallels with the late 1990s dot-com bubble. However, Goldman Sachs strongly rejected this comparison in a recent publication. According to the report, the valuations of market-leading stocks are not as extended as seen in past periods like the internet bubble that burst in 2000. In addition, these companies boast robust balance sheets and returns on investment.

AI stocks have shown impressive performance throughout the year, contributing significantly to the recovery of the S&P 500 index following a setback in 2022. Goldman Sachs forecasts a substantial rise in global investments in artificial intelligence, with potential to reach $200 billion by 2025. This surge is linked to the economic opportunities presented by generative AI, a subset of AI focused on generating content using large language models. Previous reports suggest that generative AI could contribute up to $4.4 trillion to the global economy.

While Goldman Sachs remains optimistic about the future of AI investments, some specialists advise caution and recommend a thoughtful approach when considering investments in this sector. To assist individuals in making informed decisions, Oppenheimer introduced the PEARL framework for thorough research.