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Jim Covello, head of stock research at Goldman Sachs, raises concerns about the AI market, likening current trends to past economic bubbles. His recent research paper questions the potential return on an estimated $1 trillion in AI spending, highlighting the unreliability of generative AI in solving complex problems. This skepticism has contributed to a 7% decline in Goldman’s AI stock basket since July 10.
Covello's experience with tech booms and busts informs his cautious stance on AI investments. He argues that the high costs associated with AI services do not justify their benefits, as evidenced by a generative AI tool that saved time but was six times more expensive. The ongoing debate within Goldman Sachs reflects a broader uncertainty in the market about the true value of AI technologies.
• Goldman Sachs' AI stock basket has declined 7% since July 10.
• Covello's skepticism mirrors past tech bubble experiences.
Covello questions its reliability in solving complex problems, citing frequent mistakes.
Covello's research challenges whether this spending will yield sufficient returns for businesses.
Covello found these services to be costly and not sufficiently beneficial for employees.
The firm is actively evaluating AI technologies and their economic implications.
Their recent skepticism about AI aligns with Covello's concerns regarding the technology's economic viability.
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