Goldman Sachs says the AI gold rush has barely begun
The investment firm says fears about a bubble are overwrought
Spencer Platt
While a growing number of analysts and investors fear the investment in artificial intelligence is looking more and more like the dot-com bubble of 2000, Goldman Sachs is not among them. The financial services company, in a note to investors this week, said that it believes the AI story is just getting started – and the investments that seem huge today will be dwarfed by the benefits AI will deliver.
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"The enormous economic value promised by generative AI justifies the current investment in AI infrastructure and overall levels of AI investment appear sustainable as long as companies expect that investment today will generate outsized returns over the long run," analysts wrote.
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The long-term value AI will generate in productivity enhancements is vastly higher than the upfront costs, Goldman argued. Long term, it said, AI adoption could add $20 trillion to the U.S. economy. AI, it said, is already delivering those gains in productivity when deployed right.
Not everyone agrees. former Meta executive and British politician Nick Clegg told CNBC he sees a "pretty high" change of an AI market correction, adding "There’s just absolute spasm of almost daily, hourly, deal making."
Goldman, though, disagrees. The current capex on AI, it said, was not a concern and is, in fact, appropriate, based on potential long-term returns.
"Generative AI still appears set to deliver a rapid acceleration in task automation that will drive labor cost savings and boost productivity, with our baseline estimates suggesting a 15% gross uplift to economy-wide US labor productivity following full adoption," the company wrote.
It expects that adoption to take place over the next 10 years.
The only possible hiccup, Goldman wrote, was that investors are betting heavily on companies early in the process. First movers are not always the ultimate winners in battles like this.
"The current AI market structure provides little clarity into whether today's AI leaders will be long-run AI winners," Goldman analysts wrote.