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Markets are still in the first phase of an AI-driven upsurge, Goldman Sachs wrote in a recent research note.
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Nvidia is the centerpiece of the first round, but analysts see even more upside in later phases of the AI story.
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The company says that AI will eventually expand to benefit other industries, such as IT services.
Artificial intelligence has already kicked markets into high gear, and yet this fuel of stock power is far from running out, Goldman Sachs said.
Instead, stocks are only in the first phase of the rise of AI, which will expand to more and more sectors, the bank said in a statement. Tuesday article.
“If Nvidia represents the first phase of the AI business, phase 2 will be about other companies helping to build AI-related infrastructure,” he said. “Phase 3 is about companies integrating AI into their products to increase revenue, while phase 4 is about the AI-related productivity gains that should be possible in many companies.”
Here’s a closer look at Goldman’s AI timeline:
First phase
Since ChatGPT sparked the AI race in late 2022, the chipmaker Nvidia catapulted onto the markets. As its semiconductors form the basis of this emerging software, the company has established itself as a cornerstone of the technology transition, growing as much as 590% over this period.
“But it’s remarkable that these gains are entirely due to earnings growth: the company’s price-to-earnings ratio is only slightly higher than it was at the start of last year,” Goldman said.
Confirming the idea that the first phase is not over, analysts predict even more gains to come. Recently, Evercore ISI set an upside target of $1,540, representing an 81% increase compared to Friday’s stock price.
“We believe investors are underestimating the importance of the chip+hardware+software ecosystem created by Nvidia,” the analysts said.
Second phase
Ultimately, Goldman expects other companies to benefit from the development of AI, although it is not limited to just semiconductor producers and designers. Cloud providers, computer hardware manufacturers and security software developers will all have a role to play.
This also extends to real-world infrastructure, as AI will need vast data centers to operate – a boost for everything from real estate to the utility sector.
It’s a bet also made by investing legend Steve Eisman, who previously explained that new GPUs require three times more electricity than traditional equipment. THE accelerated power demand will increase spending on improving the network and the companies that manage it.
Third phase
As generative AI advances, companies that can integrate the technology into their offerings will win, Goldman said.
Already, the biggest tech companies are rushing to implement services that leverage AI, and investors have rewarded those who do it best. For example, Dan Ives of Wedbush Securities has long celebrated from Microsoft The CoPilot tool as an example, calling it an “iPhone moment” for the company.
His title has won as much as…
