Goldman hints at an AI-fueled profits boom over the next 10 years

It doesn’t take an AI programmer pulling in $1 million (ex-bonus) a year to see the profound effects the rapidly-spreading technology will have on society.

And one of those profound effects will on one particular society: Truckloads of money for corporate America.

But don’t just take my trusted word for it.

Check out some new number crunching by the team at Goldman Sachs.

Goldman’s econ folks estimate that generative AI could potentially lift US productivity by roughly 1.5 percentage points per year over the next 10 years. Based on the historical relationship between productivity growth and corporate profits, this jolt could lift S&P 500 net profit margins by four percentage points over that decade.

Looked at another way, higher net profit margins for companies equate to accelerated earnings and cash flow growth. And guess what could come next: An accelerated path higher for the S&P 500.

“Artificial intelligence represents the biggest potential long-term support for profit margins,” says Goldman’s Ben Snider.

Large, established companies are wasting no time tapping into the potential of AI.

Expedia Group CEO Peter Kern tells me the company has teamed up with ChatGPT developer OpenAI to improve the travel booking process — among other benefits.

“We’re basically allowing people to use ChatGPT to ask, where should I stay near the Empire State Building or near the Eiffel Tower? What are the best hotels there? And then as they get recommendations, we save those recommendations to our trip planning products. And you can go in and search and compare and do all those things. But there’s lots more potential for that. And we are looking at interesting ways to use ChatGPT to help in service,” Kern said on Yahoo! Finance Live.

Added Kern, “We think [AI is] incredibly valuable to enhancing the consumer experience and our workers’ experience. Our service personnel will be able to use it someday.”

Want to know why AI stocks have surged this year? This is a great flavor as to why — AI technology from all sorts of vendors will be in major demand as companies look to get more productive and drive more earnings and cash flow.

I am not saying moves in top AI stocks such as are justified by any means, but there is a reason behind it all.

Now bring on 2033 earnings season.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email

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