Goldman Sachs Take on GenAI

Goldman Sachs came out with a report on GenAI - https://www.goldmansachs.com/intelligence/pages/gs-research/gen-ai-too-much-spend-too-little-benefit/report.pdf

The title is Too much spend, too little benefit. So it support the world view of the folks that say GenAI is hyped up too much. That being said when you read it, there are enough viewpoints that are optimistic too.

I wanted to have some fun with this, so I had AI list out each person quoted in the article, their point of view, whether they were optimistic or pessimistic and surprisingly counter to the title, it is pretty evenly divided whether it is hype or not hype.

I will let you decide.

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?? Exploring the Potential of Generative AI (GenAI): Optimistic vs Pessimistic Views ??

In a recent Goldman Sachs report, experts shared their perspectives on the future of Generative AI. Here’s a summary of their views, rated on a scale of optimism to pessimism.

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1. Daron Acemoglu - MIT Institute Professor

- Rating: ?? Pessimistic

- Point of View: Skeptical about the economic upside of GenAI, estimating minimal impact on productivity and GDP growth within the next decade.

- Quote: "Given the focus and architecture of generative AI technology today, these truly transformative changes won’t happen quickly and few—if any—will likely occur within the next 10 years."

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2. Brian Janous - Co-founder of Cloverleaf Infrastructure, Former VP of Energy at Microsoft

- Rating: ?? Pessimistic

- Point of View: Concerned about the US power infrastructure's ability to handle the surge in demand driven by AI.

- Quote: "The US has unfortunately lost the ability to build large infrastructure projects—this is a task better suited for 1930s America, not 2030s America."

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3. Jim Covello - Head of Global Equity Research, Goldman Sachs

- Rating: ?? Pessimistic

- Point of View: Doubts the ROI of AI technology due to its high costs and the complexity of problems it needs to solve.

- Quote: "AI technology is exceptionally expensive, and to justify those costs, the technology must be able to solve complex problems, which it isn’t designed to do."

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4. Kash Rangan - US Software Equity Research Analyst, Goldman Sachs

- Rating: ?? Optimistic

- Point of View: Enthusiastic about the long-term potential of GenAI, highlighting significant infrastructure investments and productivity benefits.

- Quote: "Spending is certainly high today in absolute dollar terms. But this capex cycle seems more promising than even previous capex cycles."

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5. Eric Sheridan - US Internet Equity Research Analyst, Goldman Sachs

- Rating: ?? Optimistic

- Point of View: Optimistic about AI’s long-term potential, noting that current capex spend aligns with previous tech investment cycles.

- Quote: "[AI] dollars spent vs. company revenues… are not materially different than those of prior investment cycles."

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6. Joseph Briggs - GS Global Economics Research

- Rating: ?? Optimistic

- Point of View: Believes GenAI will significantly boost productivity and GDP by automating a large share of work tasks.

- Quote: "We have long argued that generative AI could lead to significant economic upside, primarily owing to its ability to automate a large share of work tasks."

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7. Carly Davenport - GS US Utilities Equity Research

- Rating: ?? Neutral to Optimistic

- Point of View: Discusses the significant increase in US power demand driven by AI and data centers.

- Quote: "After stagnating over the last decade, we expect US electricity demand to rise at a 2.4% compound annual growth rate (CAGR) from 2022-2030, with data centers accounting for roughly 90bp of that growth."

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8. Alberto Gandolfi - GS European Utilities Equity Research

- Rating: ?? Optimistic

- Point of View: Argues that AI data centers and electrification could boost European power demand by 40-50% over the next decade.

- Quote: "AI data centers and electrification could boost European power demand by +40% over the coming decade."

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9. Toshiya Hari - GS US Semiconductor Equity Research

- Rating: ?? Neutral to Pessimistic

- Point of View: Highlights supply constraints in the semiconductor industry that could limit AI growth.

- Quote: "We expect industry supply, rather than demand, to dictate AI chip shipments through 2H24 and into early 2025 given constraints on two key fronts: High-Bandwidth Memory (HBM) technology and Chip-on-Wafer-on-Substrate (CoWoS) packaging."

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10. Anmol Makkar - GS US Semiconductor Equity Research

- Rating: ?? Neutral to Pessimistic

- Point of View: Echoes concerns about constraints in semiconductor supply and the anticipated growth in CoWoS capacity.

- Quote: "TSMC’s CoWoS capacity should grow >2x in 2024 and ~2x again in 2025, easing the packaging bottleneck."

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11. David Balaban - GS US Semiconductor Equity Research

- Rating: ?? Neutral to Pessimistic

- Point of View: Discusses bottlenecks in CoWoS packaging and the expected increase in capacity to meet AI chip demand.

- Quote: "This advanced packaging capacity has been in short supply since the emergence of ChatGPT in late 2022."

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12. Ryan Hammond - GS US Portfolio Strategy Research

- Rating: ?? Optimistic

- Point of View: Sees room for the AI theme to drive US equities, particularly benefiting Utilities due to increased power demand.

- Quote: "We expect continued investment in AI will drive outperformance of the companies exposed to that investment."

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13. Christian Mueller-Glissmann - GS Multi-Asset Strategy Research

- Rating: ?? Neutral to Pessimistic

- Point of View: Believes a very favorable AI scenario is needed for the S&P 500 to deliver above-average returns in the next decade.

- Quote: "A very favorable AI scenario may be required for above-average S&P 500 returns in the coming decade."

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What are your thoughts on the future of Generative AI? Share your views in the comments! ??

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