Widespread artificial intelligence adoption could fuel productivity, benefit economies and even boost major currencies, according to Goldman Sachs. But the clearest impact will be on stocks, said the investment bank in a July note. Stock prices should rise when earnings get a boost from the productivity boom. “The impact is clearest in equities, which should rise on a higher forward outlook for GDP and profits,” Goldman wrote. Widespread adoption of AI could fuel a 10-year period in which annual productivity growth could reach as much as 1.5 percentage points higher, said the bank. “If so, that would be comparable to the two large innovation-driven productivity booms since 1900, around the widespread adoption of electricity and the PC/internet,” Goldman wrote. “The most interesting opportunities from these shifts will likely take place at the company level,” it added. Goldman highlighted the types of areas that are likely to capture a greater portion of market earnings: those that supply the investment for the transition to the new tech; those in which the share of spending increases; or those that generate new products enabled by the new technology. Goldman’s analysts are estimating, in its base case for AI productivity growth, a 50 basis points incremental earnings per share CAGR (compound annual growth rate) for the S & P 500 — from 4.9% to 5.4% in the next 20 years. “Our economists also estimate that AI could drive ~US$7tn in global economic growth over 10 years, underpinned by productivity growing 1.5pp faster annually,” the bank wrote. AI adoption could directly boost the level of global gross domestic product by 7% — or roughly 5% in emerging markets and 10% in developed markets, Goldman said. Screens Goldman said AI investment is likely to surge first within tech hardware, then slow to a more moderate pace, while software investment could increase steadily over time as end user adoption increases. While such investment trends are likely to play out in AI leaders such as China and the U.S. — which is positioned to be the market leader in AI technology — the investment impact is likely to be smaller and more delayed in other countries, the bank said. In a separate Aug. 3 report, Goldman identified AI as one of five themes in Asia-Pacific it’s positive on. Its screen picks out AI companies in Asia — in hardware, semiconductors and applications — that could benefit from rising AI demand. Another criterion that the bank used was the stocks’ average correlation with the top U.S. AI beneficiaries. This screen sieves out stocks in Greater China and South Korea with market caps of more than $500 million and average daily volume trade of more than $5 million. Here are five stocks with the highest weightage in each of Goldman’s three generative AI screens: hardware, semiconductors and applications. — CNBC’s Michael Bloom contributed to this report.
Goldman Sachs names stocks to play AI
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