Goldman Sachs reported its first-quarter results on Monday, surprising analysts with a stellar result. The Wall Street giant’s profits rose 28% from a yr ago, helped by a 32% rise in investment banking fees. In the corporate’s subsequent conference call with analysts, CEO David Solomon said something in regards to the growth of Goldman’s business – and his comments were likely well received by AI bulls.
He noted that Goldman is already working with clients to debate how and when the brand new technology will impact their business, the labor market or the regulatory landscape. Solomon also said he expects there will likely be significant demand for AI-related restructuring and infrastructure projects, and subsequently financing, in the long term, providing a tailwind for Goldman’s business.
“I actually think there are very, very constructive opportunities for us with our clients as people reposition their businesses – and we’re talking on a scale that is, quite frankly, unprecedented,” he told analysts. “I think this opportunity is … not a quarter-by-quarter thing, it’s in the next five to 10 years, and we’re very, very focused on it and very committed to it.”
Solomon also identified that it isn’t just firms driving the rise of AI, but additionally governments which might be getting involved at scale and making “tremendous investments to deliver the infrastructure in their locations.”
Government spending on AI is something tech bulls like Erika Klauer, technology equity portfolio manager at Jennison Associates, have said before Assets will help boost some key AI-related stocks in the approaching years. “[Nation-states] would like to have their own version of ChatGPT, with training in their own languages… their own archives, their own cultural nuances,” she explained last month. “And so these governments are coming to look for their own AI initiatives – and that’s an extraordinary opportunity.”
The opportunity inside AI is so great – and so talked about – that analysts on the corporate’s earnings call Monday asked Goldman’s Solomon for comparisons to the dot-com era of the late ’90s and early 2000s.
The CEO declined to comment on this comparison, but noted that big tech firms have dominated the AI market thus far. “We have a large market capitalization driven by large platforms that have a huge competitive advantage in scaling these technologies,” he said.
Solomon also said that Goldman, like most large firms, is expanding its use of AI internally. The CEO sees “tremendous opportunities” for productivity and efficiency gains within the business on account of the technology, but “as with any new technology, a thoughtful approach and keen eye to risk management will be critical,” he added.
The risks of using AI also concerned his CEO colleague Walter Bettinger II when he answered analysts’ questions in Charles Schwab’s conference call on Monday. He believes AI represents an awesome opportunity for the economy, his customers and his company, but there are serious risks that must be considered – reminiscent of AI’s propensity to hallucinate – and the hype could also be a bit overblown.
Companies, particularly financial firms, will still have a variety of work to do with regulators before they will use AI “without the inherent biases that you sometimes see,” based on Bettinger.
“If you move to something like generative AI, I think it will take a while for that technology to mature. I know this may not fit the hype some are talking about, but I think the technology needs to become more sophisticated,” he added.
