The AI Investment Boom: When Will It Pay Off?

Exchanges

Goldman Sachs

Business

4.3 • 1.1K Ratings

🗓️ 2 June 2026

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

The economics of artificial intelligence are more questionable today than two years ago, says Goldman Sachs Research's Jim Covello, as enterprise buyers, model companies, and hyperscalers have yet to show returns on their spend. In a conversation with Alison Nathan and George Lee on Goldman Sachs Exchanges, Covello discusses where we've seen economic value accrue to date and why semiconductor companies can't continue to be the sole beneficiaries of the AI buildout. This episode was recorded on May 26, 2026. The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment advice, a recommendation from any Goldman Sachs entity to take any particular action, or an offer or solicitation to purchase or sell any securities or financial products. This material may contain forward-looking statements. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any ownership or license rights between any such company and Goldman Sachs. A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs. Disclosures applicable to research with respect to issuers, if any, mentioned herein are available through your Goldman Sachs representative or at ⁠http://www.gs.com/research/hedge.html⁠ Goldman Sachs does not endorse any candidate or any political party. Copyright 2026. All rights reserved. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Look, at some point you got to make money.
0:07.0	You make investments in a business so that you can generate returns and make money.
0:11.0	And we've gotten further away from that over the last couple years instead of closer to it.
0:15.0	That doesn't mean it's never going to happen. It just means the stakes are higher.
0:19.0	Welcome to another episode of Goldman Sachs exchanges.
0:21.7	I'm Alison Nathan, and I'm here with George Lee, co-head of the Goldman Sachs Global Institute.
0:26.4	Together we're co-hosting a series of episodes exploring the rise of AI and everything it could
0:31.1	mean for companies, investors, and economies.
0:34.5	George, great to see you again. Great to be here.
0:38.3	And this should be fun, George, because today we are talking to someone who at least in the past several years has really disagreed a fair amount, I think, or taken a different view than you on AI.
0:49.3	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 all, 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 welcome, Jim. Yeah, no, it's great to be here.
1:15.2	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.
1:20.1	So, Jim, as we mentioned a couple of years ago, you came out with what I would characterize
1:24.3	as a pretty skeptical, somewhat out of consensus view of generative
1:28.9	AI. And you particularly questioned the economics of the technology. You had a lot of doubts
1:34.1	about whether the returns the technology would generate, whatever really justify all of this
1:39.5	KAP-X you have seen pouring into the technology over the last couple of years. So two years on, where do you
1:44.9	think you've been right? Yeah. And where have you been wrong? Yeah. So I like to start off with
1:49.5	where we've been wrong. And so we just published another report most recently where we started
1:53.9	off with where we've been wrong. We called it the mark to market two years later versus the report
1:57.6	that you and I worked on together. So firstly, consumer adoption of AI
2:01.3	has been magnificent, much greater than I expected George accurately predicted that spot on.
	...

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