While corporate investment in AI has exceeded expectations, Corporate America is not yet fully adopting AI in a profitable way. According to Covello, semiconductor companies are the only ones in the AI value chain making money right now. We review why this unbalanced supply chain is unsustainable.
Investment Strategy | Live Insights
Understanding the AI Investment Landscape: Enterprise Adoption, Hyperscaler Capex, and Open-Source Models
Understanding the AI Investment Landscape: Enterprise Adoption, Hyperscaler Capex, and Open-Source Models
As consumer adoption and corporate investment in artificial intelligence accelerate, markets are demanding greater transparency into enterprise adoption. The Wealth Management Investment Strategy Group unpacks what investors should consider about increasing corporate AI capital expenditures, the impact of open-source and open-weight models, and the implications of circular financing.
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We're in a different part of the AI investment cycle today… where the stock market and investors are demanding a lot more visibility and a lot more capital discipline for companies.”
Sharmin Mossavar-Rahmani, chief investment officer of Wealth Management and head of the Investment Strategy Group (ISG), and Jim Covello, head of Global Equity Research for Goldman Sachs, discuss the AI investing landscape.
The AI Value Chain (0:45)
Unlocking Enterprise Value (3:46)
According to Covello, to unlock value, enterprises need to build agentic AI on properly structured data while facilitating the cost-effective deployment and orchestration of AI models. He explains why bridging frontier models with open-source alternatives may be the missing link to unlocking real returns.
Capex Under Pressure (7:08)
The market is becoming more skeptical of, and sometimes penalizing companies for, excessive capital expenditure without clear revenue returns. We discuss how this shift is reshaping tech valuations and forcing hyperscalers to prove their return on invested capital. We also discuss the impact of circular financing, the influence of Chinese models, and whether there will be more downside for investors.
AI as a Transformational Technology (14:31)
Despite questions around today's economics, Covello believes AI has the potential to be one of the most transformative technologies of our lifetime. He discusses why investors should be focused on fundamental questions, like whether the end user makes or saves money, and why he believes many of the sector's biggest winners may still lie ahead.
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Many of AI's biggest winners may be companies investors haven't heard of yet.”
Bring clarity to your AI investment strategy. Speak with a Goldman Sachs wealth advisor.
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