Goldman Sachs is bullish about generative artificial intelligence: It expects it will drive upside in the broader S & P 500 — and one specific corner of tech. An AI-fueled rally has already brought the S & P 500 to highs this year, but Goldman predicts there’s going to be further upside. “We believe further upside exists to the S & P 500 index level if investors price some potential productivity and profit boost from AI adoption,” Goldman analysts wrote in a June 6 note. It has new estimates: Based on its analysis that widespread AI adoption would boost productivity growth by 1.5 percentage points per year over 10 years, Goldman expects that the S & P 500’s CAGR (compound annual growth rate) earnings per share would be 5.4%, higher than its current estimate of 4.9%. That would push the S & P 500’s fair value to 9% above today’s level, Goldman said. But there are caveats: Productivity scenarios could differ, leading to fair value upsides that could range from 5% to 14%, according to Goldman. For example, policy response such as a higher corporate tax rate could offset any boost to earnings, or higher interest rates could negate increases in the S & P 500 fair value. Stock picks AI servers are a corner of the market that Goldman is optimistic about. Thanks to demand for generative AI, supply of AI server equipment is likely to get a boost in the next couple of years, Goldman Sachs said in a separate report on June 1. Currently, there are around 150,000 units of generative-related AI server shipment this year — around 1% of total server shipment, according to the bank. The number of units could grow by around 75% in 2024. The new type of AI server that’s designed for generative AI applications might contain eight graphics processing units, more than the zero to two for typical servers, according to Goldman. The bank said that within the sector, the server printed circuit board (PCB) supplier Gold Circuit Electronics should benefit the most from the generative AI server investment opportunity, giving it an increased price target of 140 Taiwanese dollars ($4.50), or nearly 5% upside. It added that Taiwan’s suppliers of copper clad laminate — a material used for electronic circuits — and PCB should also benefit. It named buy-rated Unimicron , giving it a price target of 235 Taiwanese dollars, or upside of around 33%, as well as Kinsus (price target of 180 Taiwanese dollars, or 55% upside), Taiwan Union Technology (price target of 93 Taiwanese dollars, or 22% upside) and Elan Microelectronics (price target of 250 Taiwanese dollars, or 141% upside). — CNBC’s Michael Bloom contributed to this report.
