Goldman Sachs actively supports the AI boom which has not ended: comparable to the technology cycle of 1997, not the peak of the internet bubble.

Goldman Sachs released a research report stating that there is still room for advancement in the artificial intelligence investment cycle, comparing the current surge in AI spending and valuation to the early stages of the technology boom in the late 1990s, rather than a speculative peak. The firm pointed out that "from multiple indicators, the current AI-related boom is more similar to the technology boom of 1997 to 1998, rather than the state of 1999 or 2000." That period was the construction phase of the internet era, with progress in productivity and infrastructure beginning to show, but without the formation of market speculation. Goldman Sachs cautioned that high returns on capital cannot be guaranteed, but indicated that as long as there are no external shocks or fund limitations to disrupt the momentum, the current trend indicates that there is "ample room for advancement in the AI investment boom." This analysis implies that the expansion phase of AI may continue as companies heavily invest in data centers, semiconductors, and model training infrastructure. The firm's statement reinforces the view that AI is still in its construction phase, similar to the years before the bubble of internet frenzy, when long-term productivity gains were just beginning to show. Goldman Sachs' Head of Technology, Media, and Telecommunications Research, Eric Sheridan, also pointed out that the valuations of today's listed companies are still based on free cash flow, return on capital, and profit margins, in stark contrast to the situation in 1999 when companies with no income received the highest valuations. He stated that most of today's tech giants are able to generate huge free cash flows and conduct stock buybacks and dividends, which was "almost unheard of" in 1999. In addition, current capital market activities are far below levels seen during historical bubble periods, with the IPO market being "more selective." Goldman Sachs' comparison of the current situation to the years before the internet bubble has strengthened market optimism towards AI-related stocks and infrastructure investments. This view may boost market confidence in chip manufacturers, cloud service providers, and data center developers, who are seen as core players in the current investment wave. Furthermore, regarding the recent 5% correction in the US stock market, Goldman Sachs pointed out that this is a typical seasonal fluctuation at the end of the AI cycle, and not an abnormal signal indicating the end of the upward trend. According to Goldman Sachs Fixed Income, Forex, and Commodities Trader Shreeti Kapa, a 5% decline at this time of year is a normal phenomenon in this cycle. She believes that despite the strong rebound since the April low, the market overall is "not overextended." Kapa's optimistic view is based on favorable seasonal factors towards the end of the year and she expects the market to have a 5-10% upside before the end of the year, with broad market participation. She noted that many institutional investors are skeptical about the future market direction, believing that this year's market top has already occurred and attempting to adjust their positions accordingly. This widespread cautious sentiment may create the potential for the index to "substantially increase" in the remaining 35 trading days of the year. Kapa stated that the core logic supporting the continued rise in the market before the end of the year is based on the judgment that the artificial intelligence revolution is still in its early stages. She believes that institutional investors have not fully allocated their positions to the AI theme. At the same time, fund flows are expected to be favorable before the end of the year, and the market anticipates that the Fed's monetary policy next year may be more dovish than last year.