Goldman Sachs is warning that the artificial intelligence (AI) market is creating a huge selling point for investors.
Goldman Sachs analyst Ben Snider says the AI-fueled rally that has helped push the S&P 500 to repeated highs is creating a risk once again as the market’s gains become increasingly tied to one big theme. reports Searching for Alpha.
The report says Goldman has published a “reckless track record” of stocks with positive earnings updates but less exposure to AI-related trading and changing economic growth prospects.
The list includes pharmaceutical company Eli Lilly, social media giant Reddit, gold mining company Newmont, food company Archer-Daniels-Midland and Casey’s General Stores.
Goldman’s drawing comes as investors continue to focus on companies built around artificial intelligence, semiconductors and technology infrastructure.
The company says other sectors outside of commercial AI have shown little correlation to these themes, including consumer electronics, healthcare and real estate.
According to the report, the current meeting differs from the previous ones because the earnings forecasts are improving, especially for companies that are related to AI infrastructure and power. However, income comparisons have been easier outside of those areas.
Goldman says that the risk is that the market becomes like “one big market,” with many stocks moving according to AI-driven data.
The report says that the bank’s neutrality is designed to identify stocks with strong earnings potential that are not reflected in AI and high growth rates.
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