The explosion of interest in artificial intelligence this year has fueled a major rally in technology stocks, with a concentrated group of large US companies leading the market higher. This slate of “early winners,” including makers of semiconductors needed to build AI technology and cloud service providers with the computing infrastructure to commercialize it, returned roughly 60% through the first eight months of 2023, according to Goldman Sachs Research. Even as those stocks have rallied substantially, they don’t appear to be in a bubble, Peter Oppenheimer, chief global equity strategist in Goldman Sachs Research, writes in the team’s report. The valuations of the stocks leading the market are not as stretched as in previous periods, such as the internet bubble that collapsed in 2000, and the companies have unusually strong balance sheets and returns on investment. “We believe we are still in the relatively early stages of a new technology cycle that is likely to lead to further outperformance,” Oppenheimer writes. Technology stock valuations have climbed this year despite the impact of rising rates. This is in sharp contrast to 2022, when the sector’s sensitivity to rising discount rates depressed valuations, and it suggests investors are assuming much higher future growth rates for these companies.
Full report : Goldman Sachs trashes AI bubble talk, predicts upcoming AI and AGI revolution.
