Goldman Sachs: AI risks are intensifying the debate over stock valuations

As reported by Golden Finance, on April 28, a strategist at Goldman Sachs said that disruptive risks brought about by artificial intelligence (AI) are intensifying market debate over stock valuations. A team led by Ryan Hammond believes: “The AI disruption threats investors perceive have made them more focused on the ‘terminal value’ of many stocks.” Their analysis based on a 10-year dividend discount model indicates that “the terminal value of the S&P 500 index currently accounts for about 75% of its total equity value, nearing the highest level in the past 25 years.” The strategists specifically pointed to recently weakened software stocks and other “light-asset” industries. “For these stocks whose value is highly concentrated in the distant future, the recent sharp fall in share prices stands in stark contrast to resilient short-term returns, further highlighting the importance of long-term growth prospects.”(East New Media)