AI Boom Boosts S&P 500 and High-Yield ETFs, Goldman Sachs Predicts

Goldman Sachs predicts that the S&P 500 is undervalued due to the adoption of new artificial intelligence technology in corporate America. The widespread adoption of AI is expected to lift trend real GDP growth by 1.1 percentage point for 10 years, resulting in an 11% increase in earnings per share in 20 years and a 9% increase in the S&P 500 fair value. However, the benefit to S&P 500 fair value could be as small as +5% or as large as +14% due to the uncertainty around the potential productivity boost. Nvidia's recent outlook reflects a fundamental shift to accelerated computing, placing Nvidia's chips that power generative AI in high demand.