- “Over the next 10 years, AI could increase productivity by 1.5% per year. And that could increase S&P500 earnings by 30% or more over the next decade,” the analyst told CNBC on Thursday. Goldman Sach chief strategist Ben Snider.
- Tech companies are the immediate winners, but “the real question for investors is who will be the winners going forward,” he added.
- Snider recommended investors spread their US equity investments across cyclical and defensive sectors, touting the energy and healthcare sectors for their attractive valuations.
Over the next 10 years, AI could increase productivity by 1.5% per year. And it could boost S&P500 earnings by 30% or more over the next decade, according to Goldman Sachs.
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Goldman Sachs is optimistic about artificial intelligence and believes the technology could help drive profits in the S&P 500 over the next 10 years.
“Over the next 10 years, AI could increase productivity by 1.5% per year. And that could increase S&P500 earnings by 30% or more over the next decade,” the analyst told CNBC on Thursday. Goldman’s senior strategist, Ben Snider.
The emergence of ChatGPT, the chatbot developed by OpenAI, has sparked a storm of interest in AI and the possible disruptions to many people’s daily lives. It also instilled new excitement among investors hungry for a new engine of earnings growth at a time when rising borrowing costs and supply chain issues dampened optimism.
“A lot of the favorable factors that led to this (S&P 500) expansion in earnings seem to be reversing,” Snider told CNBC on “Asia Squawk Box.”
“But the real source of optimism now lies in productivity improvements thanks to artificial intelligence.”
“It’s clear to most investors that the immediate winners are in the technology sector,” Snider added. “The real question for investors is who is going to win down the road.”
He pointed out that “in 1999 or 2000, during the tech bubble, it would be very hard to imagine Facebook or Uber changing the way we live.”
Snider recommended investors spread their US equity investments across cyclical and defensive sectors, touting the energy and healthcare sectors for their attractive valuations.
In the shorter term, he said he expects the US Federal Reserve to have completed most of its monetary policy tightening.
“The question is, how will this continue to affect the economy in the future?” Snider said. “A sign of concern in the recent earnings season is that S&P 500 companies are starting to cut corporate spending a bit.”
High interest rates could be one reason, he said.
“If interest rates are high, as a business you might be a little more reluctant to issue debt and therefore you might reduce your expenses. And indeed, if we look at S&P 500 redemptions, they were down 20% year-over-year in the first quarter of this year – a sign that we may not have seen the full effects of this tightening cycle.”