According to Goldman Sachs, current market pricing suggests that long-term implied growth for the S&P 500 (SP500) is elevated, which is supported by the optimism and growth potential of artificial intelligence (AI).
The investment bank went on to say that while implied long-term growth is higher, it’s not at bubble levels that were seen in previous parts of market history.
Many investors have shown concerns about the idea of a bubble forming that is likely fueled by the hype around AI and fear markets may see another dotcom style bubble pop situation, but Goldman Sachs indicated that that scenario is not what is currently playing out.
“Based on a single-stage dividend discount model, long-term implied real growth near 4.7% is well above its average of 2.7% since 1950… Assuming the same payout ratio since 1900 (as a lot of US Tech stocks do not pay dividends) results in a slightly lower implied real growth of 3.9%. This remains well below tech bubble peaks,” Goldman Sachs said in a research note on Tuesday.
See the below chart that Goldman Sachs provided:
On a separate note, the major market averages opened lower on Wednesday as markets are in the red. See a group of ETFs that can be used to track the benchmark indices below:
Dow, S&P, and Nasdaq ETFs: (DIA), (DDM), (UDOW), (DOG), (DXD), (SDOW), (SPY), (VOO), (IVV), (SSO), (UPRO), (SH), (SDS), (SPXU), (QQQ), (QLD), (TQQQ), (QID), and (SQQQ).
