It's exactly what the stock market has needed to stay afloat as headwinds — including an earnings slowdown and elevated interest rates — have continued to pile up. Theis basically flat since the beginning of April, with the AI hype helping to offset multiple economic challenges.
There are two core elements in play: the productivity boost that widespread AI adoption is supposed to drive, and the resulting positive impact on profit margins, which are the primary driver of stock gains.The case for an AI-led productivity boom isn't just being led by stock bulls. Academic researchers have also reached the same conclusion.
"The introduction of large language models [and] artificial intelligence is going to create a productivity boom that we've only seen a few times in the last 75 years," JonesMarket veteran Ed Yardeni — who previously served as chief investment strategist for Oak Associates, Prudential Equity Group, and Deutsche Bank — thinks AI-driven productivity has the potential to start a new prolonged bull cycle for stocks.a couple weeks ago.
This decline is poised to hamper the S&P 500's ability to continue generating returns in line with its historical trend. That's because margin expansion has been the market's ace in the hole as revenue and GDP growth have slowed. Without that support, Goldman says stocks will fall below their long term average.This is where AI comes back in and ties it all together. According to Goldman, generative AI will boost US productivity growth by roughly 1.
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