Global Markets Comment: Distinguishing AI Risks—Size of the Pie vs. Share of the Pie

Research evidence excerpt

Global Markets Comment: Distinguishing AI Risks—Size of the Pie vs. Share of the Pie

Goldman Sachs Global Markets Comment

the last 6-9 months. So alongside the risks to the market view of the aggregate gains

from AI, there might also be risks to the market’s view of the distribution of winners and

losers.

This set-up has, in our view, left the market vulnerable to any challenges to the more

optimistic story. Robust earnings may dominate valuation concerns with the investment

boom likely to continue to extend, but we still think investors should focus on the

potential challenges to the theme and their consequences for portfolios. Our general

view is that precision about the nature of any potential “shock” is key to understanding

its cross-asset impact. The challenge is that there are a bewildering number of different

possible narratives that could create risk to the current AI story. Although each may have

its own specific characteristics, we think it useful to try to think of ways to organize and

simplify these different kinds of worries.

Aggregate value or its distribution

In weighing those risks, we think a key distinction is whether a shock/risk shifts views on

the likely aggregate value of AI-related innovation or on the distribution of that value (or

both). Put simply, some worries are about the size of the pie, and some are about how

the pie is shared. We have already shown that this distinction is critical to understanding

recent trends in equity volatility, but it is also critical to the cross-asset footprint.

This distinction is embedded in the macro approach we have taken to looking at the

value that we expect from AI. Our global economics team has calculated the Present

Discounted Value of the additional GDP from the productivity gains that they expect