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Artificial intelligence has been the dominant theme in markets for the last 18 months, as evidenced by the jaw-dropping rallies of Nvidia and other stocks tied to the semiconductor giant.
Nvidia has become the most valuable company on Earth after what's arguably the best run ever by any stock. After accounting for its recent 10-for-1 split, the Santa Clara-based chipmaker traded for $14.61 at the end of 2022. Its shares have since risen ninefold to $135, bringing its market value to over $3.3 trillion, which is more than Amazon and Meta Platforms combined.
Everyone is jealous of Nvidia's success, from investors piling into the stock to firms scrambling to explain why they will be a winner during the once-in-a-generation AI revolution. To that point, executives are referencing AI on earnings calls at record rates, according to Goldman Sachs.
While many companies touting their AI plans are just spouting the market's favorite buzzword, a new report from Goldman Sachs confirms that many future AI winners haven't taken off yet.
There will be four key phases of the AI boom, wrote David Kostin, the chief US equity strategist at Goldman Sachs, in a mid-June note.
Fittingly, the first phase is solely about Nvidia, which makes the chips that help data centers process AI-related tasks. The stock is on such a heater that its six-month return is already close to 30 percentage points higher than when Goldman published this note.
The second phase is focused on firms building AI infrastructure that are in the semiconductor, data center, networking, cloud, and security industries, as well as utilities. These companies lay the groundwork for AI by designing integrated circuits, manufacturing chips and memory units, operating data centers that power AI models, storing data, or providing electricity.
Although AI infrastructure stocks broadly haven't caught fire this year, their returns crush those in the third phase, which are companies that can put AI in their products to juice sales. In fact, these would-be AI winners had lost ground in the last six months as of mid-June, Kostin noted.
Stocks in the fourth phase — which can potentially enjoy productivity gains after adopting AI — also haven't achieved liftoff.
The lackluster relative returns of stocks that are downstream in the AI development cycle show that investors aren't yet focused on less-obvious AI winners. It's unclear when those companies will rally and expand their earnings multiples, but Goldman believes this will happen eventually.
Goldman Sachs shared a list of 50 stocks across sectors that will grow their earnings by using AI to increase productivity while reducing labor costs. All but 13 of those firms are outside of the technology sector, which is widely seen by investors as the most obvious AI beneficiary.
Below are the 37 non-technology stocks that can be among the biggest long-term winners of the AI revolution, according to Goldman Sachs. Along with each is its ticker, market capitalization, sector, forward price-to-earnings (P/E) ratio, labor cost as a percentage of sales, and the potential change to its baseline earnings because of AI.
Ticker: PINS
Market cap: $30.2B
Sector: Communication Services
Forward P/E ratio: 26x
Labor cost as a percentage of sales: 34%
Potential change to baseline earnings from AI: 162%
Source: Goldman Sachs
Ticker: NYT
Market cap: $8.2B
Sector: Communication Services
Forward P/E ratio: 28x
Labor cost as a percentage of sales: 43%
Potential change to baseline earnings from AI: 67%
Source: Goldman Sachs
Ticker: NWSA
Market cap: $15.5B
Sector: Communication Services
Forward P/E ratio: 33x
Labor cost as a percentage of sales: 19%
Potential change to baseline earnings from AI: 63%
Source: Goldman Sachs
Ticker: ZI
Market cap: $4.4B
Sector: Communication Services
Forward P/E ratio: 11x
Labor cost as a percentage of sales: 46%
Potential change to baseline earnings from AI: 58%
Source: Goldman Sachs
Ticker: HRB
Market cap: $7.4B
Sector: Consumer Discretionary
Forward P/E ratio: 11x
Labor cost as a percentage of sales: 52%
Potential change to baseline earnings from AI: 57%
Source: Goldman Sachs
Ticker: KSS
Market cap: $2.4B
Sector: Consumer Discretionary
Forward P/E ratio: 12x
Labor cost as a percentage of sales: 7%
Potential change to baseline earnings from AI: 49%
Source: Goldman Sachs
Ticker: CPNG
Market cap: $36.5B
Sector: Consumer Discretionary
Forward P/E ratio: 65x
Labor cost as a percentage of sales: 9%
Potential change to baseline earnings from AI: 49%
Source: Goldman Sachs
Ticker: KMX
Market cap: $11.3B
Sector: Consumer Discretionary
Forward P/E ratio: 22x
Labor cost as a percentage of sales: 5%
Potential change to baseline earnings from AI: 42%
Source: Goldman Sachs
Ticker: AMZN
Market cap: $1,900B
Sector: Consumer Discretionary
Forward P/E ratio: 35x
Labor cost as a percentage of sales: 10%
Potential change to baseline earnings from AI: 39%
Source: Goldman Sachs
Ticker: LEA
Market cap: $6.5B
Sector: Consumer Discretionary
Forward P/E ratio: 8x
Labor cost as a percentage of sales: 7%
Potential change to baseline earnings from AI: 30%
Source: Goldman Sachs
Ticker: WMT
Market cap: $543.7B
Sector: Consumer Staples
Forward P/E ratio: 26x
Labor cost as a percentage of sales: 9%
Potential change to baseline earnings from AI: 44%
Source: Goldman Sachs
Ticker: WBA
Market cap: $13.9B
Sector: Consumer Staples
Forward P/E ratio: 5x
Labor cost as a percentage of sales: 6%
Potential change to baseline earnings from AI: 38%
Source: Goldman Sachs
Ticker: COST
Market cap: $386B
Sector: Consumer Staples
Forward P/E ratio: 48x
Labor cost as a percentage of sales: 6%
Potential change to baseline earnings from AI: 31%
Source: Goldman Sachs
Ticker: OXY
Market cap: $54.3B
Sector: Energy
Forward P/E ratio: 15x
Labor cost as a percentage of sales: 6%
Potential change to baseline earnings from AI: 9%
Source: Goldman Sachs
Ticker: WMB
Market cap: $51B
Sector: Energy
Forward P/E ratio: 22x
Labor cost as a percentage of sales: 6%
Potential change to baseline earnings from AI: 9%
Source: Goldman Sachs
Ticker: KMPR
Market cap: $3.8B
Sector: Financials
Forward P/E ratio: 12x
Labor cost as a percentage of sales: 11%
Potential change to baseline earnings from AI: 42%
Source: Goldman Sachs
Ticker: BRO
Market cap: $26.4B
Sector: Financials
Forward P/E ratio: 24x
Labor cost as a percentage of sales: 41%
Potential change to baseline earnings from AI: 40%
Source: Goldman Sachs
Ticker: FAF
Market cap: $5.5B
Sector: Financials
Forward P/E ratio: 13x
Labor cost as a percentage of sales: 16%
Potential change to baseline earnings from AI: 38%
Source: Goldman Sachs
Ticker: WTW
Market cap: $17.2B
Sector: Financials
Forward P/E ratio: 15x
Labor cost as a percentage of sales: 34%
Potential change to baseline earnings from AI: 36%
Source: Goldman Sachs
Ticker: MMC
Market cap: $104.8B
Sector: Financials
Forward P/E ratio: 23x
Labor cost as a percentage of sales: 28%
Potential change to baseline earnings from AI: 30%
Source: Goldman Sachs
Ticker: FNF
Market cap: $13.4B
Sector: Financials
Forward P/E ratio: 10x
Labor cost as a percentage of sales: 15%
Potential change to baseline earnings from AI: 30%
Source: Goldman Sachs
Ticker: VOYA
Market cap: $7.3B
Sector: Financials
Forward P/E ratio: 9x
Labor cost as a percentage of sales: 18%
Potential change to baseline earnings from AI: 30%
Source: Goldman Sachs
Ticker: THC
Market cap: $13.4B
Sector: Healthcare
Forward P/E ratio: 15x
Labor cost as a percentage of sales: 31%
Potential change to baseline earnings from AI: 135%
Source: Goldman Sachs
Ticker: DVA
Market cap: $12.5B
Sector: Healthcare
Forward P/E ratio: 14x
Labor cost as a percentage of sales: 41%
Potential change to baseline earnings from AI: 105%
Source: Goldman Sachs
Ticker: UHS
Market cap: $12.6B
Sector: Healthcare
Forward P/E ratio: 13x
Labor cost as a percentage of sales: 35%
Potential change to baseline earnings from AI: 91%
Source: Goldman Sachs
Ticker: IQV
Market cap: $38.8B
Sector: Healthcare
Forward P/E ratio: 18x
Labor cost as a percentage of sales: 61%
Potential change to baseline earnings from AI: 77%
Source: Goldman Sachs
Ticker: RCM
Market cap: $5.3B
Sector: Healthcare
Forward P/E ratio: 51x
Labor cost as a percentage of sales: 23%
Potential change to baseline earnings from AI: 77%
Source: Goldman Sachs
Ticker: EHC
Market cap: $8.6B
Sector: Healthcare
Forward P/E ratio: 20x
Labor cost as a percentage of sales: 34%
Potential change to baseline earnings from AI: 68%
Source: Goldman Sachs
Ticker: ILMN
Market cap: $17.2B
Sector: Healthcare
Forward P/E ratio: 69x
Labor cost as a percentage of sales: 33%
Potential change to baseline earnings from AI: 54%
Source: Goldman Sachs
Ticker: CLVT
Market cap: $3.6B
Sector: Industrials
Forward P/E ratio: 7x
Labor cost as a percentage of sales: 23%
Potential change to baseline earnings from AI: 232%
Source: Goldman Sachs
Ticker: RHI
Market cap: $6.7B
Sector: Industrials
Forward P/E ratio: 19x
Labor cost as a percentage of sales: 85%
Potential change to baseline earnings from AI: 150%
Source: Goldman Sachs
Ticker: DAY
Market cap: $7.9B
Sector: Industrials
Forward P/E ratio: 28x
Labor cost as a percentage of sales: 43%
Potential change to baseline earnings from AI: 125%
Source: Goldman Sachs
Ticker: TTEK
Market cap: $11.1B
Sector: Industrials
Forward P/E ratio: 30x
Labor cost as a percentage of sales: 72%
Potential change to baseline earnings from AI: 122%
Source: Goldman Sachs
Ticker: SAIC
Market cap: $5.9B
Sector: Industrials
Forward P/E ratio: 14x
Labor cost as a percentage of sales: 33%
Potential change to baseline earnings from AI: 115%
Source: Goldman Sachs
Ticker: IP
Market cap: $16.1B
Sector: Materials
Forward P/E ratio: 19x
Labor cost as a percentage of sales: 16%
Potential change to baseline earnings from AI: 41%
Source: Goldman Sachs
Ticker: JLL
Market cap: $10.1B
Sector: Real Estate
Forward P/E ratio: 14x
Labor cost as a percentage of sales: 30%
Potential change to baseline earnings from AI: 120%
Source: Goldman Sachs
Ticker: HE
Market cap: $1B
Sector: Utilities
Forward P/E ratio: 5x
Labor cost as a percentage of sales: 12%
Potential change to baseline earnings from AI: 26%
Source: Goldman Sachs
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