Goldman Sachs' CEO says AI is driving more companies to reinvent themselves. ‘We're talking about a level of scale that is candidly unprecedented’



Goldman Sachs reported its first-quarter earnings on Monday and surprised analysts with a standout showing. Profits at the Wall Street giant surged 28% from a year ago, bolstered by a 32% rise in investment banking fees. In the company’s follow-up conference call with analysts, CEO David Solomon gave some color about the growth in Goldman’s business—and his comments were likely well received by AI bulls.

He noted Goldman is already working with clients to discuss how—and when—the new technology will impact their businesses, the labor market, or the regulatory landscape. Solomon also said that over the longer term, he believes there will be significant demand for AI-related reorganizations and infrastructure projects, and therefore financing, which will be a tailwind for Goldman’s business

“I actually think there’s a very, very constructive runway of opportunity sets for us with our clients as people reposition their businesses—and we’re talking about a level of scale that is candidly unprecedented,” he told analysts. “I think that opportunity is…not a quarter-to-quarter thing, this is over the next five to ten years, and we’re very, very focused on it and very engaged.”

Solomon also noted that it’s not just companies driving the rise of AI, as governments are getting involved in a big way, “making enormous investments in bringing infrastructure into their locales.”

Government spending on AI is something that tech bulls like Erika Klauer, a technology equity portfolio manager at Jennison Associates, previously told Fortune will help boost a few key AI-linked stocks for years to come. “[Nation-states] would like to have their own version of ChatGPT, with training on their own languages…their own archives, their own cultural nuances,” she explained last month. “And so those governments are coming to search out their own AI initiatives—and that is an extraordinary opportunity.”

The opportunities within AI are so huge—and so widely talked about—that analysts asked Goldman’s Solomon about comparisons to the dot-com era of the late ‘90s and early 2000s on the firm’s conference call Monday.

The CEO refused to comment on that comparison, but he did note that large tech companies are dominating the AI run so far. “We’ve got a lot of stock market capitalization that is being driven by big platforms that have an enormous competitive advantage around the scaling of these technologies,” he said.

Solomon also said that Goldman, like most major corporations, is expanding its use of AI in-house. The CEO sees “enormous opportunities” for productivity and efficiency gains at the company due to the technology, but “like with any emerging technology, a thoughtful approach and keen eye on risk management will be crucial,” he added.

The risks of using AI were also on fellow CEO Walter Bettinger II’s mind as he answered analysts’ questions on Charles Schwab’s conference call Monday. He believes AI is a huge opportunity for the economy, his clients, and his business, but there are serious risks to take into account—like AI’s tendency to hallucinate—and the hype may be a bit overdone.

Companies, particularly financial companies, will have a lot of work to do with regulators before they can use AI “without inherent biases you sometimes see,” according to Bettinger.

“When you switch over to something like Generative AI, I think it’s going to be a while to watch that technology mature. I know that may not match some of the hype that we hear some speaking of, but I think that technology will need to mature,” he added.

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