Goldman Sachs Sees Significant Upside From ChatGPT Frenzy Amid Odds - Only Caveat: Government Policy

Despite high uncertainty around AI's impact, Goldman Sachs Group, Inc GS strategists see artificial intelligence as offering the most significant potential long-term support for U.S. profit margins.

AI can boost net margins by nearly 400 basis points over a decade, the strategists, led by Ben Snider, said, as other mounting headwinds, like a potential recession, interest rates, elevated inventory levels, and inflation, make significant near-term margin expansion "unlikely."  

Microsoft Corp MSFT backed OpenAI's ChatGPT launch triggered a frenzy, with companies rushing to launch contending tools and investors snapping up anything AI-related. 

There have been about 1,600 mentions of AI by U.S. and European firms in first-quarter earnings conference calls, Bloomberg reports. 

The strategists also flagged the uncertainty around the potential response of government policy towards AI adoption, making it difficult to predict the eventual return on corporate profits.

At the end of March, Goldman strategists said investors should buy U.S. growth stocks with high margins while avoiding low-margin growth stocks.