AI Hype in the Stock Market is Beginning to Fade, Says Goldman Sachs
Summary
The excitement surrounding artificial intelligence (AI) in the stock market is starting to dwindle, according to Goldman Sachs. During the third quarter, the proportion of S&P 500 companies mentioning „AI“ in their quarterly earnings calls dropped from 35% in the […]
The excitement surrounding artificial intelligence (AI) in the stock market is starting to dwindle, according to Goldman Sachs. During the third quarter, the proportion of S&P 500 companies mentioning „AI“ in their quarterly earnings calls dropped from 35% in the second quarter to 29%. This decline indicates a cooling down of AI hype.
The enthusiasm for AI was evident in the rapid increase of Google search volumes for AI in early 2023. However, these search volumes have now stabilized in recent weeks. This stabilization suggests that the initial novelty of AI has worn off, at least for the time being.
Goldman Sachs points out that this trend could pose a risk to mega-cap tech stocks, such as Microsoft and Alphabet, which have heavily invested in AI. The emergence of technologies like ChatGPT, developed by OpenAI, has benefited these larger companies. However, if AI enthusiasm continues to decline, these tech giants may face challenges.
The moderation of AI hype comes at a time when hedge funds have heavily invested in mega-cap tech stocks, which introduces another potential risk. If enthusiasm for AI continues to fade, these hedge funds could be motivated to sell, resulting in potential profit booking.
Despite the slowdown in mentions of AI on quarterly earnings calls, Wedbush analyst Dan Ives remains optimistic about the future of AI. He believes that there is still significant potential for AI to generate more business for tech companies like Microsoft. Ives sees the monetization opportunities in deploying AI and ChatGPT in the cloud as transformative for the industry, with Microsoft leading the way.
It is clear that while the hype surrounding AI in the stock market may be calming down, the long-term potential and growth opportunities of this technology still remain.
FAQ
Q: What is AI?
A: AI, or artificial intelligence, refers to the development of computer systems that can perform tasks that usually require human intelligence, such as visual perception, speech recognition, and decision-making.
Q: What is S&P 500?
A: S&P 500 is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States.
Q: What is ChatGPT?
A: ChatGPT is a language model developed by OpenAI that uses AI to generate human-like responses in text-based conversations.
Q: How do hedge funds relate to AI in the stock market?
A: Hedge funds are investment funds that pool capital from accredited investors. They have been investing heavily in tech stocks, particularly those involved in AI, which poses both opportunities and risks as the AI hype cools down.
Q: What is the significance of Goldman Sachs’ analysis?
A: Goldman Sachs’ analysis provides insights into the changing landscape of AI in the stock market. It indicates that the initial excitement surrounding AI is diminishing and highlights the potential risks faced by companies heavily invested in AI technology.