Goldman Sachs' Eric Sheridan says there is a clear shift happening in the artificial intelligence trade. He joins 'Closing Bell Overtime' to talk the rotation out of Big Tech names.

New York

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

Goldman Sachs Managing Director Eric Sheridan has indicated a noticeable shift in the artificial intelligence (AI) trade landscape. Sheridan, speaking on 'Closing Bell Overtime,' highlighted a trend from investing in AI infrastructure towards focusing on the application layer. While the NASDAQ 100 experienced a downturn of just over 2%, companies like Amazon, Apple, Microsoft, and Google Alphabet have seen varying degrees of declines year to date. This trend signals a move towards businesses like Meta, which focuses more on applications than infrastructure.

Sheridan noted that within the enterprise software space, AI application names might start to perform differently than hardware-centric firms such as NVIDIA, Dell, and Supermicro. He emphasized the importance of digital consumer exposure, mentioning companies like Amazon, Uber, and Meta as strategic focuses. These companies seem to align with the shift from AI training to inference, a transition predicted to influence the market over the coming years.

Sheridan also commented on the increasing openness in technology as Chinese tech companies, led by Alibaba, make significant moves in the market. Furthermore, he dismissed a notion to strictly compare Chinese versus US AI tech trades and suggested viewing the shift from a broader market perspective. Rather than geographical divides, the move from foundational AI model development to practical application, akin to the rise of companies such as Uber and Airbnb during the mobile computing era, represents potential for returns on AI investments. Key focus areas include the adoption of technologies like ChatGPT, Google Gemini, and Meta AI, with the resulting capital expenditure patterns being crucial for future visibility and profitability.



'Clear shift' happening in the AI trade, says Goldman Sachs

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Rise of AI