Artificial Intelligence: The Unstoppable Momentum in the Stock Market

While the stocks of major technology companies recovered during the pandemic due to increased demand for digital products, they continue to rise despite high interest rates. Market participants consider them leaders in the AI industry. Thus, a fascinating picture emerges: Since October 2022, the share price of an extraordinary AI company has soared by an astounding 1,100%. An investment of $100 would have yielded an impressive $1,200 by today. AI is making its impact felt across various industries, with not only graphics processors being significant. Other components, such as data centers, networking equipment, and energy infrastructure, also contribute to the realization of ambitious plans. For instance, OpenAI CEO Sam Altman plans to build 36 chip factories and additional data centers—an endeavor requiring $7 trillion. Goldman Sachs categorizes the AI sector into four groups. The first, with particularly high returns, belongs to market leaders who have increased by 179% since October. The second group includes utilities and infrastructure companies that have long shone in the S&P Index. Utilities achieved strong performance between March and May with a 16% return. The demand for energy for data centers is rapidly increasing, especially in Northern Virginia, where a need for 11,000 megawatts is forecasted by 2035. Estimates suggest that AI could account for 16% of US energy consumption by 2030. In contrast, Goldman’s revenue forecast shows that the revenues of semiconductor companies, as well as software and hardware, could multiply their 2019 levels by 2025. Among the recommended stocks is Belden, a company from the data center sector, which has recorded significant revenue growth in recent years. Despite certain uncertainties, Goldman Sachs sees key potentials in specific AI stocks that could experience equally spectacular price increases.