Goldman Sachs chief David Solomon says the AI boom is generating powerful tailwinds for growth as two banking giants abruptly boost their price target for the S&P 500.
In an interview at Goldman’s Communacopia + Technology Conference, Solomon says artificial intelligence will power growth and productivity even amid macroeconomic concerns.
“And if you think about the changes in technology and media over that period of time, you know, email was just invented in the early 90s. Nobody had it. You think about where we are with AI. You think about the interest. There are 3,000 clients here, hundreds of companies, coming together.
And really, of course, the theme is on how this technology is accelerating. How’s it going to evolve? How is it going to create productivity? And the level of excitement and the tailwinds that that has for economic growth and investment are really, really quite strong…
There’s a lot going on in the world. We can talk about the macro and some of the things that balance, but if you’re looking over the horizon, these are powerful forces that certainly are going to drive growth and productivity in very interesting ways.”
Solomon’s comments come as Barclays and Deutsche Bank unveil new year-end price targets for the S&P 500. Citing exuberance around artificial intelligence, a resilient US economy, and strong corporate earnings, Deutsche lifts its S&P 500 year-end price target to 7,000 from 6,550.
As of Wednesday’s close, the S&P 500 is trading at 6,532.
Says Binky Chadha, analyst at Deutsche Bank,
“We expect equity valuations to remain elevated by historical standards, driven by higher payout ratios, perceptions of higher trend earnings growth…and earnings resilience with fewer significant drawdowns.”
While Barclays has raised its forecast for the market index from 6,050 to 6,450, it warns that the S&P 500 could end the year at lower levels amid a weakening job market.
“Corporate earnings are solid and global GDP growth is stabilizing, but US labor market risks are worsening.”
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