AI driving global stock markets skyward
The recent surge in artificial intelligence (AI) has translated to impressive gains on global stock markets, which saw their strongest first-quarter performance in the past five years. Investors have shown an insatiable appetite for technology stocks, fuelled by the potential of AI to revolutionise industries worldwide.
At the forefront of this market rally is Nvidia, a leading chip designer whose role in the deployment of AI technologies has been crucial. Its market value soared by more than US$1 trillion in just the first three months of this year.
Recent analysis from Goldman Sachs suggests that Nvidia represents the first phase of the AI boom. It says the next phase will involve infrastructure companies that are essential to the development of AI: semiconductor firms, cloud providers, data centres, security software and utilities companies.
The third phase, it projects, will benefit those companies that can enhance their revenues from the adoption and monetisation of AI technologies.
“Software and IT services seem best positioned for this phase of the AI adoption cycle, with many companies describing how their tools will enable other companies to utilise AI,” say Goldman Sachs.
The fourth phase will favour those companies that achieve significant productivity improvement through the adoption and integration of sophisticated AI.
“Software and services and commercial and professional services have the largest potential earnings boost from widespread AI adoption via labour productivity,” say Goldman Sachs. “These three industries have a combination of a high share of their wage bill exposed to AI automation and relatively high labour costs.”