AI fears drive U.S. stock investors to rethink long-term growth bets, says Goldman
Goldman Sachs has raised concerns about the impact of AI on long-term growth forecasts for U.S. equities, particularly in the software sector. The firm noted that terminal value now constitutes a significant portion of the S&P 500's equity value, reminiscent of the dotcom boom. Investor anxiety over AI disruption is evident as major tech companies invest heavily in AI while facing scrutiny over immediate returns.
- ▪Goldman Sachs highlighted that profits expected more than 10 years into the future account for about 75% of the S&P 500's equity value.
- ▪The S&P 500 software and services index has dropped about 17% this year due to fears of AI impacting revenue growth.
- ▪Goldman estimates that a 1% decline in long-term growth assumptions could reduce the combined enterprise value of S&P 500 companies by 15%.
- ▪High-growth stocks are particularly vulnerable, with potential valuation drops of around 29%.
- ▪Only 5% of S&P 500 firms discussed financial metrics beyond five years in recent earnings calls.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountAI’s potential to disrupt businesses has sparked concerns over the dependency of U.S. equity valuations on long-term growth forecasts, particularly in the software sector, Goldman Sachs said.Profits expected more than 10 years into the future - often called terminal value - now account for about 75 per cent of the S&P 500’s equity value, near a 25-year high, the Wall Street brokerage said.“Today’s share of value in the terminal value is elevated versus history and mirrors other periods where investor long-term growth expectations were increasingly optimistic, including the dotcom boom,” Goldman said in a note on Thursday.Investor concerns around AI disruption have been building since Anthropic launched…
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