Banking giant Goldman Sachs says the way investors are approaching artificial intelligence today looks fundamentally different from the mindset that fueled the dot-com bubble 25 years ago.
In a Bloomberg Podcast interview, Goldman Sachs chief US equity strategist Ben Snider says market behavior over the past several years has been shaped by uncertainty, pushing investors to anchor decisions on near-term earnings rather than distant projections.
He says that focus has concentrated capital in areas where profits are already visible.
“What the market has been doing, given the uncertainty over the last couple of years, is really focusing on near-term earnings. It’s been the semiconductors, obviously. It’s been the hyperscalers to some extent, power companies, et cetera.”
According to Snider, the investor mindset today is in stark contrast to what the market witnessed in the late-1990s tech boom, when valuations expanded rapidly on expectations rather than results.
“I think that is actually one of the key differences between this market and what happened 25 years ago during the dot-com bubble, where we saw valuations expand quite dramatically as investors tried to look forward and guess at the productivity gains and the economic benefits. Today, investors are saying, ‘We saw what happened that time. It’s too hard. And so what we’re really going to focus on is the earnings today.’”
While Snider acknowledges optimism is clearly embedded in current valuations, he says it is a more restrained and pragmatic form of confidence than many expected.
“With valuations at the current level, there’s clearly optimism. But it’s a very different kind of optimism from, frankly, what I expected a few years ago.”
Rather than aggressively pricing in distant AI winners, he says clients have been reluctant to pay upfront for long-term narratives.
“Investors will be asking, ‘Who are the long-term winners?’ And trying to pay for those immediately, that has really not been the story.”
As more data related to AI comes in, Snider says clients are now beginning to get an idea of who will emerge as the winners of the AI race.
“That’s the key pivot that’s happened in our conversations with clients over the last few months. As this anxiety has built up about the AI infrastructure trade, and as for the first time, we’ve seen some public companies discreetly quantify the earnings boost of AI, the narrative has shifted. The narrative has shifted from how much will the semiconductors and other infrastructure companies make next year to how can we identify long-term productivity winners.”
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