AI Revolution: Goldman Sachs Identifies Non-Technology Sectors with Great Potential

Investors are currently feverishly searching for safe ways to profit from the rapid rise of artificial intelligence (AI) in the US stock market. The renowned investment bank Goldman Sachs recently released an investor note highlighting which economic sectors, beyond the technology field, could benefit from the AI hype. The analysts particularly emphasize the positive impacts of AI on utilities, industry, retail, and healthcare. Goldman Sachs analysts are convinced that AI tools could help companies from non-technology sectors enhance their productivity and reduce labor costs. A prime example is NVIDIA; the company has become one of the most valuable in the world thanks to its key role in AI data centers. However, the market has so far insufficiently rewarded companies with indirect AI exposure. David Kostin, Chief US Equity Strategist at Goldman Sachs, stated in the investor note that the AI boom would unfold in four phases. The first phase focused on companies like NVIDIA that build AI infrastructures. In the second phase, companies involved in the buildup of AI infrastructures such as semiconductors, data centers, and networks should be in the spotlight. The third phase would then affect companies that integrate AI into their products to boost sales. Companies in the fourth phase, according to Kostin, are those that increase their productivity through the application of AI. These firms have been largely ignored by the market so far. The industrial sector demonstrates Goldman’s theory in practice: since the beginning of 2023, the value of industrial stocks has risen by almost 30%, with those companies directly benefiting from AI more than doubling their value. In the fourth quarter of 2023, over 30% of industrial companies mentioned AI in their quarterly reports, compared to only 10% in the same period the previous year. The potential of companies outside the technology sector in the AI domain has now also become popular among hedge fund managers. According to Goldman Sachs, the reason is simple: by mimicking the top stock picks of the best hedge funds, one could outperform the market. The company offers a quarterly newsletter strategy that since May 2014 has achieved a return of 275%, surpassing its benchmark by 150 percentage points. An example of a company in the spotlight of this analysis is Amazon.com. The tech conglomerate uses an AI model from Anthropic to power the latest version of its virtual assistant Alexa. Amazon.com is viewed bullishly by Wall Street analysts. Cantor Fitzgerald recently commenced coverage of the company with an "Overweight" rating and a price target of $230, citing the growth of retail margins and the acceleration of AWS. Overall, Amazon ranks first on our list of 35 stocks with long-term investment potential outside the technology sector. However, we believe that some other AI stocks may offer higher returns within shorter time frames.