Goldman Sachs: Platform Stocks in Focus for the Next AI Investment Wave

Interest in Artificial Intelligence (AI) has experienced a resurgence after a temporary cooling period, and analysts at Goldman Sachs predict that a new group of stocks will benefit significantly from this wave. Instead of focusing on obvious candidates like Nvidia and other AI infrastructure companies, the specialists recommend directing attention to a select group of platforms capable of developing direct AI applications. According to Goldman Sachs, these platform stocks, which include databases and development tools, are expected to be the primary beneficiaries of the next wave of investment in generative AI. By expanding AI-integrated applications, they offer the best opportunities for utilizing AI infrastructure by providing building blocks for the next generation of applications. Among the platform stocks mentioned by the analysts are Microsoft, DataDog, MongoDB, Elastic, and Snowflake. Despite some significant losses this year due to short-term fundamental weaknesses, these companies appear promising thanks to historically low valuations and simultaneously stabilizing revisions as investments in AI pick up again. Interestingly, many investors still focus on Nvidia and companies building AI infrastructure, such as semiconductor manufacturers, cloud providers, and data center REITs. While there is still price potential for these stocks, returns are likely to be driven more by earnings than by valuations, according to the analysts. The platform stocks stand out as an exception among the "Phase 3" stocks that could potentially capitalize from the monetization of AI, in contrast to the "Phase 4" stocks, which would benefit from a more general proliferation that might still be years away. The analysts' comments follow a period of waning interest in AI stocks over the summer, accompanied by concerns about returns from extensive AI expenditures. In July, Nvidia experienced a dramatic decline but recently managed to recover as AI demand increased following Federal Reserve rate cuts and positive macroeconomic data.