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When AI’s ‘inevitable slowdown’ comes it could tank the S&P 500 by up to 20%, Goldman Sachs says
The looming danger, Goldman says, is when Amazon, Alphabet, Amazon, Meta, Microsoft, and Oracle decide to reduce their capital expenditure.
Goldman Sachs warns a major slowdown in AI investment by Big Tech could cut the S&P 500’s valuation multiple by up to 20%, but adds the current risk is below the level of previous bubbles. Today it is the turn of Goldman Sachs, where Ryan Hammond and his team have made a lengthy and thoughtful attempt to assess whether Nvidia et al. are heading for a crash. With regard to so-called Phase 3 companies, for example, those which will benefit from the ripple effect of the technology, the analysts write: “We expect the AI trade will eventually broaden out to some Phase 3 companies, but investors will likely require evidence of a tangible near-term impact on earnings … Our equity analysts acknowledge that there has been limited value creation in enterprise software applications thus far.”
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