The AI Investment Boom: When Will It Pay Off?

Look. At some point, you gotta make money. You make investments in a business so that you can generate returns and make money, and we've gotten further away from that over the last couple of years instead of closer to it. That doesn't mean it's never gonna happen. It just means the stakes are higher.

Welcome to another episode of Goldman Sachs exchanges. I'm Allison Nathan, and I'm here with George Lee, co head of the Goldman Sachs Global Institute. Together, we're cohosting a series of episodes exploring the rise of AI and everything it could mean for companies, investors, and economies. George, great to see you again.

Great to be here.

And this should be fun, George, because today we are talking to someone who, least in the past several years, has really disagreed a fair amount, I think, or taken a different view than you on AI. Our guest is Jim Cabello, head of global equity research here at Goldman Sachs. And, again, you've had many debates with Jim about this topic.

Well, first of it's great to have Jim here. He is both a great friend and a great thinker. And while we differ on some matters related to AI, we actually there's much that we agree on, and it's been very fun to have this dialogue over multiple years.

So For sure.

Welcome, Jim.

Yeah. No. It's great to be here. Thank you. And I agree. George is everything that makes Goldman Sachs great to me, and it's been incredible going on this journey with you, and here we are again. Here we are again. Exactly.

So, Jim, as we mentioned a couple of years ago, you came out with what I would characterize as a pretty skeptical, somewhat out of consensus view of generative AI, and you particularly questioned the economics of the technology. You had a lot of doubts about whether returns that technology would generate would ever really justify all of this CapEx you have seen pouring into the technology over the last couple of years. So tears on where do you think you've been right Yeah. And where have you been wrong?