Goldman Sachs portfolio strategist Christian Müller-Glissmann stated on May 11 (local time) on Bloomberg TV that AI-driven earnings surprises appear to be nearing their end. He explained that leverage flows into semiconductor stocks are reversing, making further stock price gains difficult despite strong earnings. Goldman forecasts S&P500 Q2 earnings growth of 22% year-over-year, but analysts note investor expectations have risen so high that earnings beats alone may no longer drive stock gains.
Semiconductor Stocks Decline Despite Strong Earnings
Müller-Glissmann told Bloomberg TV that while Q2 (April–June) earnings are likely to exceed market forecasts, elevated investor expectations mean simple earnings beats will struggle to push stocks higher. He described the current situation as "excessive leverage flows into semiconductors reversing," adding that guidance and management investment plans will become more critical variables than earnings themselves in the upcoming earnings season.
AI memory beneficiary Micron has seen its sharp rally cool, while NVIDIA dropped approximately 16% from its all-time high. NVIDIA's forward 12-month price-to-earnings ratio (PER) fell to 18x, the lowest level since 2019, according to Goldman's analysis.
Goldman Sachs Refutes AI Bubble Claims
Goldman Sachs drew a line against claims that the AI investment cycle has ended. In a May 1 (local time) interview with Business Insider, Ben Snyder, Goldman Sachs' chief US equity strategist, refuted AI bubble theories and assessed that AI investment flows remain robust.
Snyder cited the fact that the S&P500's forward PER declined even as the index rose over 20% in the past year, stating, "Recent gains are not a simple bubble but a result backed by corporate profit growth." He added, "When skepticism remains in the market rather than everyone shouting optimism, that's actually a healthier situation."
Some market observers worry that hyperscalers like Microsoft, Amazon, Meta, and Alphabet may slow data center investments if they fail to confirm profitability relative to AI spending. However, Snyder projected that AI infrastructure investment expansion is likely to continue.
Goldman Identifies AI Infrastructure and Hyperscalers as Key Investment Areas
Goldman Sachs named AI infrastructure, power infrastructure, and hyperscalers as key AI investment sectors to watch. The firm expects semiconductor, server, and network equipment companies to benefit directly from AI investment expansion.
Goldman projects data center power demand will increase 50% by 2027 and up to 165% by 2030, identifying power infrastructure as a core beneficiary sector. The firm also analyzed that hyperscaler companies including Microsoft, Amazon, Meta, Alphabet, Oracle, and IBM have been relatively overlooked this year compared to semiconductor firms but are trading at the lower end of their 10-year PER range, presenting new investment opportunities.
FAQ
What did Goldman Sachs say about AI stocks on May 11?
Goldman Sachs portfolio strategist Christian Müller-Glissmann stated on Bloomberg TV on May 11 (local time) that AI-driven earnings surprises appear to be nearing their end, as leverage flows into semiconductor stocks reverse despite strong earnings.
Why are semiconductor stocks falling despite good earnings?
Müller-Glissmann explained that excessive leverage flows into semiconductor stocks are reversing, and investor expectations have risen so high that earnings beats alone can no longer drive further stock price gains. NVIDIA's forward PER dropped to 18x, the lowest since 2019, despite the company's strong fundamentals.
Which sectors does Goldman Sachs recommend for AI investment?
Goldman Sachs identified AI infrastructure, power infrastructure, and hyperscalers as key investment areas. The firm projects data center power demand will rise 50% by 2027 and up to 165% by 2030, and noted that hyperscaler stocks are trading at the lower end of their 10-year PER range.
