PORTFOLIO STRATEGY

SEPTEMBER 5, 2024 | 5:00AM BST

GLOBAL STRATEGY PAPER NO. 70

AI: To buy, or not to buy, that is the question
Peter Oppenheimer
+44(20)7552-5782
[email protected]
Goldman Sachs International

Guillaume Jaisson
+44(20)7552-3000
[email protected]
Goldman Sachs International

Sharon Bell
+44(20)7552-1341
[email protected]
Goldman Sachs International

Lilia Peytavin
+33(1)4212-1716
[email protected]
Goldman Sachs Bank Europe SE - Paris Branch

• The technology sector has generated 32% of the Global equity return and
40% of the US equity market return since 2010. This has reflected
stronger fundamentals rather than irrational exuberance. The tech sector
globally has seen EPS rise c.400% while all other sectors together have
achieved c.25% from the peak pre-GFC.

• The introduction of transformative technologies typically attracts

growing investor interest as well as signicant capital and new
competition. As enthusiasm builds and stock prices increase, the sum of
individual company valuations can overstate the total potential aggregate
returns; often a bubble develops and bursts.

• Historically, investors over-focus on the originators, understate the

impact of competition and overstate the returns on capital invested by
the early innovators. At the same time, investors tend to underestimate
_

the growth of new entrants to the industry that can piggyback o the
capex of others, enabling them to generate new products and services.
Valuations often also understate the opportunities that can accrue in the
non-technology industries that can leverage the technology to generate
higher returns in existing, as well as in new, product categories.

• In our view, the technology sector is not in a bubble and is likely to

continue to dominate returns. However, concentration risks are high and
investors should look to diversify exposure to improve risk-adjusted
returns while also gaining access to potential winners in smaller
technology companies and other parts of the market, including in the old
economy, which will enjoy the growth of more infrastructure spend.

Investors should consider this report as only a single factor in making their investment decision. For
Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html.
 Goldman Sachs Global Strategy Paper

Tech’s Rational Exuberance

Technology has been the most important driver of returns for the equity markets globally
since the end of the Global Financial Crisis. Its performance has far outstripped other
major sectors, and with good justification. Earnings per share have surged while
all industries together, outside of tech, have largely stagnated (Exhibit 1).

Exhibit 1: Tech earnings have outstripped those of the global Exhibit 2: The ‘Magnificent Seven’ earnings have outstripped the
market broader US market
12m Trailing EPS (USD). Indexed to 100 on Jan-2009. Magnificent Seven and S&P 500, 12m trailing EPS. Indexed to 100 on
Jan-2005

450
World Technology 3500
400 World Technology, Media, Telecom (TMT)
3000
World ex. TMT
350
Magnificent 7
2500
300

250 2000

200 1500

150
1000
100 S&P 500
500
50
0
0
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

Source: Datastream, Worldscope, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Increasingly, these powerful returns have been accounted for by a small group of
dominant companies, mainly in the US. These, too, have not reflected ‘irrational
exuberance’: their earnings growth has dwarfed that of the broader market,
justifying their performance (Exhibit 2).

The drivers of this success have reflected their ability to leverage software and cloud
computing and to fuel high profitability generated by extraordinary demand growth in
the period since 2010. But their more recent surge in performance since 2022 owes
much to the hopes and aspirations around AI. Despite continued powerful earnings
growth, valuations have been rising, led by an increasingly narrow group of
‘hyper-scalers’. The question for investors is whether this is becoming a bubble
_

and, even if it is not, whether the risks of such high concentration are creating a
dangerous trap for investors, or possibly an opportunity to diversify into potential
beneficiaries of these technologies through cheaper companies outside of the
dominant few.

Story Time
Financial markets reflect and anticipate fundamentals, but sentiment can also play an
important role as it does with other fashions and trends in broader life. In equity
markets, narratives have the power to attract and direct much-needed capital.
However, they can also amplify interest to the point of monopolising investor
attention at the expense of other opportunities, and leading to unrealistic
expectations about future profits and leaving companies vulnerable to a sharp
de-rating. In recent years, periods of intense speculation have centered on a variety of
narratives, ranging from the dot-com and the internet boom at the end of the last

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century, to China growth, Cryptocurrency, the Green transition and, most recently, AI.
But history reveals a much longer list, much of which revolves around the emergence of
new technologies.

The interest that new innovations receive has been an important part of directing the
necessary capital to grow and commercialise innovations. Very often the technologies
behind these periods of speculation have proved to be transformational – leading to
significant secondary innovations, new products and services, and far-reaching societal
changes to the way that we live, work and consume. Along the way, however, the
excitement often turns into an obsessive fervor with investors clambering to get
exposure to the theme at any price. That’s when bubbles emerge and, eventually, burst.
A recent study found that in a sample of 51 major tech innovations introduced between
1825 and 2000, bubbles in equity prices were evident in 73% of cases 1
.

From an investor perspective, the success and eventual impact of an innovation cannot
be known at the outset, and it is even more challenging predicting which competitor is
likely to succeed over the long run. Consequently, as more new entrants emerge,
investors tend to buy multiple companies as options on their future success, leading to
the sum of all valuations to overstate the potential returns that can be generated by a
technology or industry. The challenge for investors is less about whether they
recognise an important innovation or market driver when it emerges, but more
about whether they value the potential gains correctly and identify the correct
winners and losers.

This question is relevant in relation to the current focus on AI and its potential. While AI
is not a new technology, it has captured the imagination of investors and, by association,
companies since the launch of Chat-GPT and other large language models. The
extraordinary beat on Nvidia investor day in July 2023 sharpened the focus on the
potential for the industry. Since then, investors have clamoured for access to the theme
and companies have duly responded with record numbers mentioning AI, even in
sectors outside of the industry.
_

1
Chancellor, E., and Kramer, C. (2000). “Devil Take the Hindmost: A History of Financial Speculation”. New
York: Plume Books.

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Exhibit 3: Companies citing AI spiked following the release of Chat GPT

Proportion of S&P 500 firms mentioning “AI” during quarterly earnings calls

50 %

45 %

40 %
2Q24
41%
35 %

30 %

25 %

20 %

15 %

10 %

5%

0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Source: GS Dataworks, Goldman Sachs Global Investment Research

Lessons from History; the Market Risks and Opportunities in AI

What can history tell us about the ‘life cycle’ of new innovations and how they impact
the stock market?

Although it is difficult to generalise, some common characteristics are:

n A breakthrough technology emerges and reaches commercial scale.

n New companies and capital flood into the space.
n Speculation builds and valuations of companies rise, often resulting in a bubble.
n The bubble bursts, but the technology tends to re-emerge as a principal driver in the
_

economy and stock market.

n The technology/industry becomes dominated by a few large players.
n Secondary innovations emerge, creating new companies and products that leverage
the initial technology and its increased adoption.
n Other industries are disrupted by the innovations, forcing incumbents either to adapt
or disappear.
n The secondary innovations create new employment opportunities and, with them,
new sources of demand as many of the benefits are passed on to the consumer.
Productivity tends to rise, but usually only after the full adoption of this new
technology and network effects are realised.

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Throughout this life cycle there are typically both risks and opportunities for investors.
The risks include:

1. Underestimating the impact of competition in driving down returns.

2. Overstating the returns on capital invested by the innovators that are
developing the technology.

The upside opportunities that are often overlooked include:

1. New companies that can utilise the technology to create new goods and
services to drive new sources of demand and growth.
2. New markets that open up as a result of the technology.
3. Companies outside of the technology space that can benefit from the
technology as demand patterns change.

The impact of competition

When new products or technologies emerge, particularly when they appear
transformational, investors tend to underestimate the scale of new competition and its
impact on the future returns of the incumbents or originators. There are many useful
examples in history that demonstrate the pattern of investor excitement and the
promise of high returns leading to a surge of competition and, ultimately, overcapacity
that drives down returns. The result is often a large de-rating of companies in the
industry and, in some cases, spectacular failures of companies. Nevertheless, this
process doesn’t usually mark the end of the technology. Mostly, the infrastructure left
behind in the wake of the initial investor surge and capex leads to the emergence
of new products and services. These are often underestimated or poorly
anticipated.

Here are some of them:

Books, 16th Century

The printing press was one of the greatest ‘enabling’ technologies of all time. Following
_

its invention in 1454, its impact was spectacular. According to research by Buring and
Van Zanden 2 , the number of books published increased from zero to about 3 million per
year by 1550 in Europe - more than the total number of manuscripts produced in the
entire 14th century. By 1800, 600 million books had been published. As with all
technology innovations, the price of books collapsed.

Canals, 18th Century

The innovation of canals for transportation was an important component of the First
Industrial Revolution. The first canals built generated strong returns for investors,
attracting new inflows of capital that pushed up stock prices and led to a bubble in canal
stocks in the 1790s on the London Stock Exchange which peaked in 1793. By the 1800s,

2
Buring, E., and Van Zanden, J.L. (2009). “Charting the ‘Rise of the West’: Manuscripts and printed books in
Europe; A Long-Term Perspective from the Sixth through Eighteenth Centuries. The Journal of Economic
History, 69(2), 409-445.

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the return on capital in canals had fallen from a pre-bubble peak of 50% to just 5%, and
3
a quarter of a century later only 25% of canals were still able to pay a dividend .
Nevertheless, the canal infrastructure became instrumental in reorganising industries
and factories, which, in turn, spawned the growth of many new industries, businesses
and products. While many of the original companies failed, the infrastructure generated
strong growth for others.

Railways, 19th Century

th
A similar exuberance surrounded the growth of railways in the 19 century in the UK,
which were to become equally transformative in terms of economic growth, business
organisation and societal change. As capital flooded in, there were nearly 1,240 projects
seeking capital by 1845 and the number of miles of network increased from 100 miles in
1830 to 6,123 miles by 1850 4 . A bubble in valuations of railway stocks formed in the
1840s, and by 1850 most stocks had plummeted by an average of 85% from their peak,
and the total value of these shares had dropped to less than half the capital spent on
them 5 . As with the canals, the legacy of the infrastructure became pivotal to growth
cities, changing demands for consumer products and other industries that followed.

The Telegraph, 19th Century

The innovation of the telegraph in the mid-1840s had a similar effect. By 1851, there
were more than 50 different telegraph companies competing in the US, across the
same lines. As the returns fell, most of the firms failed or were consolidated into larger
units. Ultimately, Western Union Telegraph took over its two major competitors and
became the first US nationwide monopoly in 1866.

The Telephone, 20th Century

A similar wave of excitement followed the invention and commercialisation of the

telephone. The expiration of Bell’s original patents in 1894 generated a surge of
investment and competition. By 1904, 60% of American cities with more than 5,000
people had two phone networks. The competition drove a wave of consolidation led by
AT&T, which was eventually restricted by an antitrust settlement in 1913 that prevented
_

it from taking over independent phone companies and forced it to give up its controlling
share in Western Union Telegraph Company. Nonetheless, the constraints on its core
business encouraged AT&T to invest in new technologies through its Bell Laboratories
subsidiary which became a major innovator in new areas of telecom innovation 6
.

The Radio, 20 th Century

The periods after World Wars I and II (WWI and WWII) saw massive demand for
consumer products that attracted waves of investment as new market entrants

3
Chancellor, E., and Kramer, C. (2000). “Devil Take the Hindmost: A History of Financial Speculation”. New
York: Plume Books.
4
Campbell, Gareth (2014). “Government Policy during the British Railway Mania and the 1847 Commercial
Crisis”.
5
Odlyzko, A. (2000). “Collective hallucinations and inefficient markets: The British railway mania of the
1840s”.
6
Starr, Paul. (2002). “The Great Telecom Implosion”.

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emerged. As broadcast radio took off, for example, demand for radios surged and
between 1923 and 1930, 60% of US families purchased a radio. In 1920, US broadcast
radio was dominated by KDKA, but, by 1922, 600 radio stations had opened across the
US, supported by the growing advertising industry. A bubble developed and the value of
shares in the Radio Corporation of America (RCA), for example, rose from $5 to $500 in
the 1920s but collapsed by 98% between 1929 and 1932, and most radio manufacturers
failed, but the industry continued to grow, supported by advertising and the plethora of
new consumer products that emerged.

The personal computer (PC), 20th Century

The PC revolution fueled a similar boom in both the number of companies and the
valuations of new entrants in the market. While IBM facilitated the widespread
commercialisation of the PC, hundreds of companies entered the market in the 1980s.
In 1983, however, several companies in the sector announced losses, including Atari,
Texas Instruments and Coleco. A collapse in PC share prices followed and many PC
manufacturers went out of business, including Commodore, Columbia Data Systems
and Eagle Computer. While several of the surviving businesses took many years to
recover, the industry matured and became dominated by just a few companies.

Internet, 21 st Century

This pattern was repeated during the internet bubble of the late 1990s. Speculation
grew rapidly as investors began to see the potential of the internet. When search engine
company Yahoo! had its initial public offering, its stock rose from $13 to $33 in a single
day. Qualcomm shares rose in value by over 2,600%, 13 major large-cap stocks
increased in value by over 1,000% and another seven large-cap stocks each rose by over
900% in 1999. The Nasdaq index increased fivefold over the period between 1995 and
2000. In just a month after its peak in 2000, the Nasdaq had fallen 34% as hundreds of
companies lost 80% or more of their value. The Nasdaq itself fell by nearly 80% by the
time it troughed in October 2002.

So, there is a fairly consistent historical pattern: radical new technologies tend to
_

attract significant capital and competition. Not all examples in history end with a
spectacular bubble, but most do end with a downward adjustment in prices
across the industry as returns moderate. Even in cases where a bubble bursts and
many companies eventually collapse, this does not mean that the technology itself fails.
However, rising competition is central to reducing returns relative to market
expectations at the peak of the cycle. Eventually the market for the original technology
tends to consolidate into a few large winners, and the growth opportunity shifts to
secondary innovations or products and services that follow the original technology.

With the current dominant companies, the conditions are unusual in that most of these
were already dominant in the previous wave of technology — in particular software and
cloud. The scale of profitability that they achieved resulted in them being in a unique
position to be able to absorb the very high costs of innovation in the AI space. While the
protective ‘moats’ around the current AI winners are significant, and valuations are not
bubble-like, the number of new patents in this area is growing rapidly, suggesting that

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new competitors will emerge and costs will come down. The number of patent families
(group of patents that are all related to the same invention or technology) in GenAI has
grown from just 733 in 2014 to more than 14,000 in 2023 .
7

Exhibit 4: By 2022, the number of AI patents granted worldwide exceeded 60,000

Thousands of AI patents granted globally

70

62.3
60 Number of AI patents granted (in thousands)

50

40 38.3

30

23.4

20
15.8

10 8.1
5.1
2.6 2.7 3.1 3.5 3.8
2.0 2.2
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Stanford HAI Research, Data compiled by Goldman Sachs Global Investment Research

While the hyper-scalers have huge scale and ability to invest in proprietary AI models,
cheaper open source alternatives are emerging at a very rapid rate. The website
Hugging Face, which is a network for enthusiasts, already has around 650,000 models ,
8

suggesting that the typical pattern of large-scale capital growth and competition is
happening in the AI space, just as occurred in previous waves of technology.

Overstating returns on investment - Telecoms in the 1990s

Just as competition is often underestimated, the returns on capital invested by
_

the innovators are typically overstated. Companies at the epicenter of an innovation

often fail to achieve the returns that their high valuations imply as the marginal cost of
the technology falls and capacity increases over time, while a typical overlooked
opportunity is that investors understate the returns available to new entrants in
an industry that emerge after the initial investments are made that can piggyback
off the capex of others.

In the case of most major technological innovations throughout history, while the
potential may be obvious, it is rarely clear in the early stages what business models will
ultimately dominate to scale and commercialise the technology. This was evident in the
early days of the internet. While there was widespread and broad speculation in any
new company that offered potential exposure to the industry, the incumbent

7
Venditti, B. (2024). “Ranked: Top Companies by Generative AI Patents”. Visual Capitalist.
8
“Big tech’s capex splurge may be irrationally exuberant “. The Economist (2024).

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winners were generally seen to be the telecom companies. They were viewed as a
relatively ‘safe’ route to the potential fortunes that the internet may generate compared
to the more speculative unprofitable dot-com companies. Telecoms had the benefit of
being well-established companies, in many cases ex monopolies or state-run
enterprises, with low volatility earnings and an existing and large-scale client base. They
also had tangible assets and owned and developed fibre optic networks, routers,
wireless systems and telecoms equipment that were the underlying infrastructure of
the internet 9 . It seemed like they were in a perfect place to receive a high share of the
future revenues driven by the internet in e-shopping.

But investors significantly overstated the returns on the capital investment that these
companies made. This was partly a consequence of new entrants and partly because of
the huge scale of capital invested. Competition was stimulated by de-regulation of the
industry, led by the US, which introduced the telecoms act of 1996. The act deregulated
the broadcast and telecoms industry in order to provide an environment that could take
advantage of the technological convergence of these trends and a surge in capital
investment followed. According to the Federal Communications Commission, the
amount of fibre optic cable laid in the US went from one million miles in 1996 to 10
million by 2000, much financed by debt. When Global Crossing and WorldCom
collapsed, they had $25bn and $100bn of debt. A similar pattern occurred across
Europe. In the UK, a spending spree occurred after the government allowed 3G
spectrum auctions in April 2000 which generated £22.5bn in revenues for the
government and similar auctions in Germany raised roughly $30bn. Ultimately, however,
the capex boom resulted in severe overcapacity in bandwidth for internet usage. While
the fixed costs of these new networks were very high, the marginal costs of sending
signals over them was very low .
1011

Increasingly, competition forced prices down and by 2004 the cost of bandwidth had
fallen by more than 90%, despite internet usage doubling every few years. As late as
2005, as much as 85% of broadband capacity in the US was still going unused. Many
companies could not repay their significant debts in the US and some of the auctions for
3G licenses in 1999 had to be re-run because the original companies that made the bids
_

defaulted on their bids. When the auction was re-run, the bids were only 10% of the
12
original $4bn raised .

Ultimately, the valuation of these companies collapsed, alongside the broader

technology bubble. Between 2000 and 2002, the Dow Jones technology index lost 86%
and the wireless communications index dropped 89% with 23 companies going
bankrupt in the US alone and the failure of WorldCom became the biggest stock market
failure in history with a loss of $102 billion in July 2002 13
.

9
Starr, Paul (2002). “The Great Telecom Implosion”.
10
“UK mobile phone auction nets billions”. BBC News, April 27, 2000.
11
Osborn, Andrew (November 17, 2000). “Consumers pay the price in 3G auction”. The Guardian.
12
See Ted:
https://ideas.ted.com/an-eye-opening-look-at-the-dot-com-bubble-of-2000-and-how-it-shapes-our-lives-today/.
13
Starr, Paul (2024). “The Great Telecom Implosion”. The American Prospect.

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As in other examples in history, the problem was not a miscalculation of the

growth potential of the technology, but rather that investors had attributed too
much future value to the companies that had built technology and infrastructure
to provide it. In this case, like many others before, the ultimate winners were the
companies that could ‘free ride’ off this spending and utilise the capacity to build
business models that could leverage the technology and provide new products and
services. Many of these winners did not emerge until the onset of the smart phone in
2006 and the onset of apps which then spawned a growing industry of platform
companies, ride sharing, social media and so on.

History lessons; the opportunity

While the market for a technology innovation can become dominated by a few very large
companies for a long time, the initial transformative technology becomes a conduit that
kickstarts a whole range of other innovations and, with this, new companies and market
opportunities. At the same time, one of the other characteristics of technology is
that once new innovations become widely used by companies, the main
beneficiary is the consumer who enjoys new products and services at lower
prices.

For example, while coal and steam were the foundations of the First Industrial
Revolution, a range of other developments quickly followed. Mass migration to cities
and the movement away from agriculture resulted in demand for new consumer
products. Mechanised looms transformed the textile industry and domestic products
such as soaps, which were typically made at home, began to be manufactured in
factories. This generated new markets and became the catalyst for the building of
consumer brands, advertising and marketing. During the railway boom, the steam
engine spawned the development of the railways, and the network effect and
connectivity then allowed other technologies to develop.

Similarly, during the Second Industrial Revolution, the harnessing of gas and oil to create
electricity was one of the key driving inventions. But this, in turn, enabled the mass
production of steel, the development of the internal combustion engine and the
_

automobile. The start of the modern assembly line in factories became a further
innovation, transforming the production and distribution of a range of new products.
Similarly, the network impact of the railway boom and the telegraph fostered a host of
new market opportunities and companies.

With the computer age of the Third Industrial Revolution came the rapid acceleration of
service industries. The first transistorised consumer products started to appear in 1952,
opening new markets as consumers were willing and able to pay a premium for low
power consumption and portability. By the mid-1950s, prototype silicon devices were
developed in Northern California. Plastics and lighter materials also generated significant
new growth markets, while the growth of multinational companies opened new market
opportunities.

A similar pattern emerged with the internet as its rapid roll-out and adoption enabled the
development and penetration of the smartphone. This, in turn, spawned an industry of

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companies based on the ‘apps’ used on these phones (think of the revolution in taxi and
food delivery services, for example) and the ‘internet of things’ (a world of connected
appliances and devices).

So, while the leading tech today will most likely remain dominant in their respective
markets, rapid innovation, particularly around machine learning and AI, will likely create a
new wave of tech superstars. It is probable that AI and robotics will not only create new
faster-growing innovative companies but also raise the prospect of major restructuring
gains in non-technology sectors.

AI Is Still Not in a Bubble... but Diversification Is Important

Despite the significant interest that AI has generated, it still does not appear to
have driven a bubble in valuations which sets it apart, so far at least, from
previous narrative investment cycles like the internet in the late 1990s. The
dominant companies are less likely to be in a bubble if we compare their valuations to
other periods. Current valuations are much lower than have been typical in other recent
bubble periods, stretching back to the Nifty 50 era of the early 1970s, the Japanese
bubble in the late 1980s and indeed the technology bubble in 2000 (Exhibit 5). For
example, the median PE and EC/Sales of the 7 biggest technology companies today is
roughly half that of the dominant 7 at the peak of the technology bubble in 2000.
_

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Exhibit 5: Dominant companies today are not as expensive as those in previous ‘bubble’ periods in history

Size Valuation
Market weight Market Cap ($ Bn) *24m fwd P/E *24m fwd EV/Sales
Magnificent 7 (2024)
Apple 7.3% 3387 26.5 7.7
Microsoft 6.6% 3043 25.7 9.4
NVIDIA 5.7% 2649 24.1 13.2
Amazon 4.0% 1850 25.4 2.5
Alphabet 3.9% 1808 16.6 2.0
Meta Platforms 2.4% 1118 19.2 5.5
Tesla 1.4% 672 55.4 4.9
Magnificent 7 (2024) Aggregate 31.3% 14527 23.9 5.0

Tech Bubble Leaders (2000)

Microsoft 4.5% 581 53.2 19.2
Cisco Systems 4.2% 543 101.7 17.5
Intel 3.6% 465 42.1 11.5
Oracle 1.9% 245 84.6 19.0
IBM 1.7% 218 23.5 2.3
Lucent 1.6% 206 37.9 4.1
Nortel Networks 1.5% 199 86.4 6.4
Tech Bubble Leaders (2000) Aggregate 19.0% 2457 52.0 8.2

Japan Financial Bubble (1989)

Nippon Telegraph and Telephone 6.9% 157 100.1
Industrial Bank Of Japan 4.6% 105 154.2
Sumitomo Mitsui Banking 3.4% 77 49.2
Bank of Tokyo-Mitsubishi 3.3% 75 49.8
Fuji Bank 3.1% 71 52.8
Dai-Ichi Kangyo Bank 2.9% 65 44.0
Sakura Bank 2.8% 62 62.1
Japan Financial Bubble (1989) Aggregate 27.0% 613 67.0

Nifty 50 (1973)
IBM 7.1% 48 35.5
Eastman Kodak 3.6% 24 43.5
Sears Roebuck 2.7% 18 29.2
General Electric 2.0% 13 23.4
Xerox 1.8% 12 45.8
3M 1.4% 10 39.0
Procter & Gamble 1.4% 9 29.8
Nifty 50 (1973) Aggregate 19.9% 135 34.3

*Actual (LTM) P/E and EV/Sales data from 02/01/1973 for Nifty 50. **LTM P/E data and EV/Sales from 27/12/1989 for Japan Financial Bubble. ***24m fwd P/E and EV/Sales data from 24/03/2000 for
Tech Bubble.

Source: Datastream, Factset, Goldman Sachs Global Investment Research

Perhaps more importantly, however, the current dominant companies are much more
profitable and have stronger balance sheets than those that dominated during the tech
bubble (Exhibit 6).
_

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Exhibit 6: The current dominant companies are much more profitable and have stronger balance sheets than those that dominated during
the tech bubble
Next 12 month estimate for Big Tech & last 12 months for Tech Bubble
Fundamentals
Market Weight (%)
Cash as % of Market Cap Net Debt to Equity Return on Equity (%) Net Income Margin (%)
Magnificent 7 (2024)
Microsoft 6.6% 3.0% -20% 27% 35%
Apple 7.3% 1.8% -32% 146% 27%
Nvidia 5.7% 3.7% -61% 65% 53%
Amazon 4.0% 8.6% -21% 17% 9%
Alphabet 3.9% 4.0% -29% 27% 28%
Meta Platforms 2.4% 4.2% -23% 27% 34%
Tesla 1.4% 4.3% -25% 12% 9%
Magnificent 7 (2024) Aggregate 31.3% 4.2% -30% 46% 28%

Tech Bubble Leaders (2000)

Microsoft 4.5% 3.0% -63% 35% 39%
Cisco Systems 4.2% 0.4% -17% 22% 17%
Intel 3.6% 2.5% -33% 26% 25%
Oracle 1.9% 1.0% -61% 39% 15%
IBM 1.7% 2.7% 111% 39% 9%
Lucent 1.6% 0.9% 38% 36% 9%
Nortel Networks 1.5% 1.1% -3% -1% -1%
Tech Bubble Leaders (2000) Aggregate 19.0% 1.7% -4% 28% 16%

Source: Datastream, Factset, Goldman Sachs Global Investment Research

Over-investment risks
While the dominant companies may have justifiable valuations based on their current
and expected cash flows, there remains a risk that they will not achieve the returns on
their investment that the market currently assumes.

From the late 1990s, software and, later, cloud computing were able to be highly
effective in leveraging the technologies with very high margins and low capex. The era of
ultra-low interest rates following the financial crisis rewarded these business models
relative to traditional industry that had very high capital invested but achieved low
returns (see Exhibit 7). Most of the AI ‘hyper-scalers’ emerged out of these successes
and have the scale and cash flows to invest. Nevertheless, the AI winners of today
are no longer capital-light businesses. Just as we saw with the networking
companies of the internet, AI is driving a major capex boom and threatens to stifle
_

the high rates of returns that have characterised the sector over the past 15 years
and which current valuations imply will continue.

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 Goldman Sachs Global Strategy Paper

Exhibit 7: Capital-light businesses have significantly outperformed those that employ heavy capital
World Capital vs. Non-Capital intensive. Price return (USD) - Capital intensity based on: Assets / Employee, Assets /
Net Income, and CAPEX / Net Income.

2500

Capital Intensive Non Capital Intensive

2000

1500

1000

500

0
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Capital-intensive: Electricity, Industrial Materials, Automobiles and Parts, Gas, Water and Multi-utilities, Industrial Metals and Mining,
Telecommunications Service Providers, Leisure Goods, Construction and Materials, Oil Equipment and Services. Non-capital-intensive: Technology
Hardware and Equipment, Medical Equipment and Services, Pharmaceuticals and Biotechnology, Household Goods and Home Construction, Beverages,
Food Producers, Retailers, Tobacco, Software and Computer Services, Personal Goods.

Source: Datastream, Worldscope, Goldman Sachs Global Investment Research

Many leading tech companies are now ramping up their spending at an extraordinary
rate. According to Alphabet, spending on capex was $12bn in Q1 2024, driven
‘overwhelmingly by investment in our technical infrastructure, with the largest
component for servers, followed by data centers’. For the year it expects a similar run
rate, so close to $50bn. A new forecast from the International Data Corporation (IDC)
Worldwide Artificial Intelligence Spending Guide shows that global spending on AI,
including software, hardware and services for AI-centric systems, is expected to grow at
a compound annual growth rate (CAGR) of 27% over the 2022-2026 forecast with
_

spending on AI-centric systems expected to surpass $300 billion in 2026. Nvidia has
predicted that $1 trillion will be invested by 2027 in data center upgrading alone. The
hyper-scalers alone now represent 23% of total S&P 500 capex and R&D.

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 Goldman Sachs Global Strategy Paper

Exhibit 8: AI investment has surged over the past several years Exhibit 9: The market has significantly upgraded its AI investment
Global actual and forecast revenues by AI-exposed sector, 4Q2019=100 expectations across the AI hardware stack
Change in consensus global revenue forecasts since March 2023, $bn,
annualised

260 500
Semiconductors Semiconductors
240 450

400 Hardware Enablers (ex. Semis)

220 Hardware Enablers (ex.
Semis)
350
200 Software Enablers
300
180 250

160 200

140 150

100
120
50
100
0

1Q24

2Q24

3Q24

4Q24

1Q25

2Q25

3Q25

4Q25
80
2019 2020 2021 2022 2023 2024 2025

Source: FactSet, Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Investors have become increasingly confident about the future revenues in both
semiconductors and hardware ‘enablers’.

Perhaps surprisingly, despite all the capital invested in technology, there is little evidence
that the age of the intellectual property assets are rising. Indeed, since the start of this
century, estimates suggest the age is declining (Exhibit 10). Furthermore, the original
‘excitement’ about chat-GPT is fading in terms of monthly users (Exhibit 11). This does
not mean, of course, that the growth rates in the industry will not be strong, but it does
suggest that the next wave of beneficiaries may come from the new products and
services that can be created on the back of these foundation models.

Exhibit 10: US average age of fixed asset ‘Intellectual Property’ Exhibit 11: Number of monthly visits to chat GPT website (in
millions)

5.5 2000.00
2,000
US average age of fixed assets 'intellectual property'
1500.00 Millions of Visits Millions
1,800
5.3
of Visits
1000.00
1,600
5.1
500.00
1,400
_

4.9
01 October…
01 January…

01 January…
01 September…
01 February…

01 February…
0.00
01 November…
01 December…

01 November…
01 December…

1,200
01 May 2023

01 May 2024
01 August 2023
01 June 2023

01 June 2024
01 July 2023
01 March 2023

01 March 2024
01 April 2023

4.7 1,000 01 April 2024

4.5 800

600
4.3
400
4.1
200
3.9
0
1925 1937 1949 1961 1973 1985 1997 2009 2021
2022 2023 2023 2023 2023 2024 2024

Source: Datastream, Goldman Sachs Global Investment Research Source: Similarweb, Data compiled by Goldman Sachs Global Investment Research

The risk is that as competition increases, the returns and margins begin to fade,
and the growth rates of many of the current dominant companies will likely adjust
lower. Nevertheless, there are some reasons to be more hopeful that in previous
technology cycles. Importantly, while capex is rising sharply, our US strategy team
notes that capex relative to revenues is less alarming. At the height of the Tech Bubble,
TMT stocks were spending more than 100% of cash flows from operations (CFO) on
capex and R&D. Today, the capex and R&D as a share of CFO equals 72% currently in

5 September 2024 15
 Goldman Sachs Global Strategy Paper

the US, compared with a 40-year median of 67%.

Furthermore, as our technology analysts have argued, the significant step-up in capex
may actually generate strong returns and, by comparison, may not be very different
from what we saw with the cloud innovations. They reflect on the 2013-2016 time frame
when Microsoft was spending aggressively on capex to build out Azure when, at one
point, gross margins for Azure were negative but then became hugely profitable. They
argue that Microsoft Gen-AI revenues ($5-6 billion annualised) have scaled more rapidly
compared to Azure, which took roughly 7 years to get to comparable levels. Though
capex intensity is up sharply overall for the leading AI tech companies, today it is still
roughly where we were in the Azure cycle at comparable revenues.

Additionally, while capex has increased, and expectations of future revenues have
accelerated, the period of ‘payback’ on cash flows embedded in current valuations
remains much lower than it was at the peak of the technology bubble in 2000
(Exhibit 12).

Exhibit 12: The period of ‘payback’ on cash flows embedded in current valuations remains much lower than
it was at the peak of the technology bubble in 2000
The number of years of free cash flow of the equity market required to acquire its own market capitalisation in
each year

100
142 years 221 years

90 S&P 500 Tech

S&P 500
80
STOXX 600
70

60

50

40

30

20
_

10

0
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

We use today’s FCF, assuming no growth in future FCF and not discounting future cash flows

Source: Factset, Goldman Sachs Global Investment Research

AI and the Risk of Concentration

While these companies may be less highly valued than in other narrative-led
bubble periods, the scale of market dominance is greater this time. The 10 biggest
stocks have their highest share of the market for many decades at over one third
of the index, while the five biggest companies are worth 27% of the total value of
the S&P 500 (Exhibit 13).

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 Goldman Sachs Global Strategy Paper

Exhibit 13: The current scale of market dominance is greater than in other narrative-led bubble periods
Market value of the biggest companies of the S&P 500 as percentage of the index market value

40
Market share of top 5 companies Market share of top 10 companies

35%
35

30

26%
25

20

15

10

5
85 88 91 94 97 00 03 06 09 12 15 18 21 24

Source: Datastream, Compustat, Goldman Sachs Global Investment Research

This, again, may not be irrational. The power of the dominant companies to generate
shareholder returns and compound over time is a feature that has been recognised in
much of the literature on the subject. Bessembinder 14
, for example, conducted a study
of all 26,168 companies in the US that had publicly listed equity since 1929 and found
that, over time, while aggregate wealth creation had been $47.4 trillion, the majority
reduced shareholder wealth. He also found that the extent to which stock market wealth
creation is concentrated in a few companies has increased over time. One of the
reasons for this may be the growing issue of scale required in dominant technology
platforms, particularly when it comes to compute power and R&D spending.
Furthermore, the scale of the investments required to ramp up in this industry preclude
some smaller competitors, particularly now that interest rates have increased and the
_

cost of capital is higher.

Nevertheless, with markets being increasingly dependent on the fortunes of so

few, the collateral damage of stock-specific mistakes is likely to be particularly
high. Furthermore, other leading companies in other sectors, or parts of the World,
enjoy lower volatility than these companies. This is true, for example, for the
GRANOLAS (a list of 11 dominant companies in Europe). Prior to the market correction
in July, the ‘Magnificent 7’ stocks had explained around 50% of the S&P 500’s returns
(Exhibit 15).

14
Bessembinder, Hendrik (2020). “Wealth Creation in the U.S. Public Stock Markets 1926 to 2019”. SSRN
Electronic Journal.

5 September 2024 17
 Goldman Sachs Global Strategy Paper

Exhibit 14: The realised volatility of the GRANOLAS is on average Exhibit 15: The contribution of the ‘Magnificent 7’ and of
2x lower than for the ‘Magnificent 7’ GRANOLAS to aggregate index returns is very high
1-year realised volatility of daily returns

45% 70%
Contribution to Index Returns
40% Magnificent 7 YTD 3 years ago 5 years ago
60%
35% 51%
50% 48%
50% 48%
30%

25% 40%
35% 34%
20%
30%
15%
20%
10%
GRANOLAS
5% 10%

0% 0%
18 19 20 21 22 23 24 Magnificent 7 GRANOLAS

Source: Datastream, Goldman Sachs Global Investment Research ‘Magnificent 7’ include: Microsoft, Alphabet, Amazon, Apple, Meta, NVIDIA, Tesla; GRANOLAS
include: GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP,
Sanofi

Source: Datastream, Goldman Sachs Global Investment Research

Is high stock concentration a big risk?

Historically, with new entrants emerging, few companies remain unscathed as
competition either forces companies to disappear, merge or be acquired. From this
perspective, a market that becomes dominated by a few stocks becomes increasingly
vulnerable to either disruption or anti-trust regulation. Even companies that have enjoyed
near monopoly power in the past have ultimately succumbed to these pressures.

n Standard Oil, for example, controlled over 90% of oil production in the US by 1900
and 85% of sales.
n Bell Telecom had reached 90% of US households by 1969. Just before it
relinquished control of the Bell Operating Companies and was split into different
companies in 1982, it reached 5.5% of the market.
n General Motors’ earnings were more than 10% of the S&P 500 between 1955 and
1973. At its peak, General Motors had a 50% market share in the US and was the
_

world’s largest automaker from 1931 through to 2007.

n IBM became dominant in mainframe computers in the 1970s and had over a 60%
market share in mainframe computers in 1981.
n Microsoft became dominant in PCs, and by 2000 had a 97% share in operating
systems in the PC and laptop markets.

There are, for example, only 51 companies that have appeared every year in the Fortune
500 since 1955. In other words, just over 10% of the Fortune 500 companies in 1955
have remained on the list during the 69 years through this year15. Based on this
history, it would appear reasonable to assume that when the Fortune 500 list is released
70 years from now in the 2090s, almost all of today’s top companies will no longer exist

15
Oppeheimer, P., Jaisson, G., Bell, S., von Scheele, M., and Peytavin, L. (2024). “The Concentration
Conundrum; What to do about market dominance”. Goldman Sachs Global Investment Research, Global
Strategy Paper.

5 September 2024 18
 Goldman Sachs Global Strategy Paper

as currently configured and will be replaced by new companies in new, emerging

industries that we can’t even imagine today.

Exhibit 16: Only 51 companies have remained in the Fortune 500 list since 1955
Only these 51 companies have been in the Fortune 500 since 1955
3M Crown Holdings Honeywell International O-I Glass (Owens-Illinois)
Abbott Laboratories Cummins Hormel Foods Paccar
Altria Group Dana IBM PepsiCo
Archer Daniels Midland Deere International Paper Pfizer
Alcoa Dow Johnson & Johnson PPG Industries
Boeing Eli Lilly Kellogg Procter & Gamble
Bristol-Myers Squibb Exxon Mobil Kimberly-Clark Raytheon Technologies
Campbell Soup General Dynamics Kraft-Heinz Rockwell Automation
Caterpillar General Electric Lockheed Martin S&P Global
Chevron General Mills Merck Textron
Coca-Cola General Motors Motorola Solutions Weyerhaeuser
Colgate-Palmolive Goodyear Tire & Rubber Northrop Grumman Whirlpool
ConocoPhillips Hershey Owens Corning

Source: American Enterprise Institute, Data compiled by Goldman Sachs Global Investment Research

This process sometimes accelerates or slows down but since 1980, for example, more
than 35% of S&P 500 constituents have turned over during the average 10-year
period, largely reflecting innovation.

Of the current top 50 companies in the US, only half were in the top 50 a decade ago,
and many did not even exist before the 1990s (NVIDIA (1993), Amazon (1994), Netflix
(1997), PayPal (1998), Alphabet (1998), Salesforce (1999), Tesla (2003) and Facebook
(2004). More recently Nvidia has grown at an extraordinary pace, becoming the world’s
biggest company from a relatively small base just a few years ago.

As a result of changes in leadership and, by implication, growth, history would suggest

that buying dominant companies generates lower returns over time. For example,
Exhibit 17 shows the total return on average since 1980 that would have been achieved
by buying and holding the top 10 stocks over different time horizons (from 1 year out to
10 years), while Exhibit 18 shows the same in relative returns (compared with the S&P
500). These data suggest that, while absolute returns remain good for the
_

dominant companies, these strong returns fade over time, and they often remain
solid ‘compounders’. Importantly, however, the returns are generally negative for
dominant companies if an investor buys and holds them as other faster-growing
companies come along and outperform.

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 Goldman Sachs Global Strategy Paper

Exhibit 17: Absolute returns remain good for dominant companies... Exhibit 18: ...but they generally underperform (over the long run)
Average forward realised absolute return (US Top 10 companies). Since Average forward realised relative return (US Top 10 companies). Since
1980 1980

14% 0%
12.9%
-0.13%
12%
10.7%
10.1%
10% 9.4%
8.6% -1%
8%

6% -1.5%

-2%
4% -2.0%

2% -2.3% -2.3%

0% -3%
1y. 2y. 3y. 5y. 10y. 1y. 2y. 3y. 5y. 10y.
fwd fwd fwd fwd fwd
fwd fwd fwd fwd fwd

Source: Datastream, Goldman Sachs Global Investment Research Source: Datastream, Goldman Sachs Global Investment Research

None of this means that these companies would necessarily be poor investments.
They may well remain good compounders, be more defensive and enjoy lower
volatility and higher risk-adjusted returns. However, it does suggest that:

1) The dominant companies are unlikely to be the fastest-growing companies over

the next decade.

2) The stock-specific risk in the index is currently very high, suggesting an

increasing pay-off through diversification.

Leadership changes - Music and markets

Narrative-led trends in markets, while often backed by quality fundamentals, can also be seen in other
areas of life. Whether it is in fashion, art, music or stock markets, leaders rarely stay dominant forever and
what is most sought after does not stay constant. In music for example, Taylor Swift, is now the
largest-selling artist. She also made history by being the first artist since the charts began in 1958 to take
all top 10 songs on Billboard Hot 100 with her album ‘Midnights’ in 2022, overtaking the previous winner,
_

Drake, who had 9 of the 100s top 10 in 2021. So new leadership is not confined to the stock market.
Indeed, just as with stocks, there are the long-term staples – those that stay dominant in their category, or
large over long periods of time. The Beatles have the most ‘Hot 100’ singles of anyone over time (20),
while Mariah Carey has the most as a solo artist (19 – as well as the only artist to have a No. 1 in four
distinct decades). But these artists are now not growing their downloads in the same way as Taylor Swift is
today. It is similar in the stock market. Some of the greatest leaders have disappeared, some stay as
household names, but new leaders emerge and can become dominant very quickly. There are 5
companies in the top 10 today that were in the top 10 in 2015, 3 that were in the top 10 in 2010 and
just 1 that featured in the top 10 in 2005. In the music charts, there are 3 artists in the current top 10
that were also in the top 10 in 2015, 3 in 2010 and none that were in the top 10 in 2005.

5 September 2024 20
 Goldman Sachs Global Strategy Paper

Exhibit 19: The 10 largest S&P companies through time

By market cap on 31 December
1985 1990 1995 2000
IBM IBM 2.9% General Electric 2.6% General Electric 4.1%
Exxon Mobil Exxon Mobil 2.9% AT&T 2.2% Exxon Mobil 2.6%
General Electric General Electric 2.3% Exxon Mobil 2.2% Pfizer 2.5%
Philip Morris Philip Morris 2.2% Coca-Cola 2.0% Cisco Systems 2.4%
General Motors Royal Dutch Shell 1.9% Merck & Co 1.8% Citigroup 2.2%
Amoco Bristo-Myers Squibb 1.6% Philip Morris 1.7% Walmart 2.0%
Royal Duch Shell Merck & Co 1.6% Royal Dutch Shell 1.6% Microsoft 2.0%
Du Pont Walmart 1.6% Procter & Gamble 1.2% American Internation 2.0%
AT&T AT&T 1.5% Johnson & Johnson 1.2% Merck & Co 1.8%
Chevron Coca-Cola 1.4% IBM 1.1% Intel 1.7%

2005 2010 2015 2024

General Electric 3.3% Exxon Mobil 3.2% Apple 3.3% Apple 7.0%
Exxon Mobil 3.1% Apple 2.6% Alphabet 2.5% Nvidia 6.4%
Citigroup 2.2% Microsoft 1.8% Microsoft 2.5% Microsoft 6.4%
Microsoft 2.1% General Electric 1.7% Exxon Mobil 1.8% Alphabet 6.2%
Procter & Gamble 1.7% Chevron 1.6% General Electric 1.6% Amazon.com 3.8%
Bank of America 1.6% IBM 1.6% Johnson & Johnson 1.6% Meta Platforms A 2.4%
Johnson & Johnson 1.6% Procter & Gamble 1.6% Amazon.com 1.5% Eli Lilly 1.8%
American Internation 1.6% AT&T 1.5% Wells Fargo 1.4% Broadcom 1.6%
Pfizer 1.5% Johnson & Johnson 1.5% Berkshire Hathaway 1.4% Tesla 1.4%
Philip Morris 1.4% JPMorgan Chase 1.5% JPMorgan Chase 1.4% JPMorgan Chase 1.2%

Source: American Enterprise Institute, Datastream, Data compiled by Goldman Sachs Global Investment Research

Exhibit 20: Best-Selling music artists globally

Thousands of yearly certified record sales for 1985-2015; billions of Spotify global streams for 2023
1985 1990 1995 2000
Madonna 25,803 Michael Jackson 16,077 Michael Jackson 19,988 Backstreet Boys 26,625
Michael Jackson 25,187 Madonna 14,657 Garth Brooks 18,113 Eminem 25,177
Bruce Spingsteen 18,634 Queen 13,760 Whitney Houston 16,438 Celine Dion 20,933
Prince 15,839 Elton John 13,599 Bon Jovi 14,176 Mariah Carey 20,554
Elton John 14,114 Bruce Springsteen 11,476 Madonna 12,842 Garth Brooks 16,011
Phil Collins 12,124 Metallica 9,979 Mariah Carey 11,803 Britney Spears 15,993
Dire Straits 11,056 Phil Collins 9,699 Metallica 11,920 Christina Aguilera 13,942
Elvis Presley 10,701 Elvis Presley 9,072 Guns N' Roses 11,068 Whitney Houston 13,307
Billy Joel 10,674 Billy Joel 8,867 Celine Dion 10,759 Madonna 11,788
Queen 10,638 The Beatles 8,610 Queen 9,762 Elton John 11,021
_

2005 2010 2015 2023

Eminem 32,651 Rihanna 59,112 Drake 70,853 Taylor Swift 29.1
Lil Wayne 18,909 Kesha 49,083 Bruno Mars 62,436 Bad Bunny 16.4
Jay-Z 18,186 Taylor Swift 31,959 Ed Sheeran 57,973 The Weeknd 14.1
Mariah Carey 15,868 Flo Rida 30,972 Taylor Swift 53,352 Drake 14.0
Garth Brooks 14,313 Eminem 27,473 Justin Bieber 52,044 Peso Pluma 10.5
Britney Spears 13,378 Lady Gaga 16,615 Rihanna 41,349 Feid 7.9
Maroon 5 13,101 Chris Brown 22,008 Katy Perry 37,772 Karol G 7.4
Whitney Houston 11,024 Drake 22,156 Chris Brown 34,771 SZA 7.1
Celine Dion 10,857 Kanye West 21,555 Kanye West 28,453 Kayne West 6.9
Madonna 10,737 Katy Perry 21,436 Nicki Minaj 28,399 Lana Del Rey 6.9

Source: Statista, Data is Beautiful, RIAA, IFPI, Data compiled by Goldman Sachs Global Investment Research

5 September 2024 21
 Goldman Sachs Global Strategy Paper

The risk of anti-trust regulation

In addition to the risk of competition and failure to adapt, regulatory pressures pose a
risk for very dominant companies with increasingly monopolistic power (see: US
Economics Analyst: Concentration, Competition, and the Antitrust Policy Outlook, 18
July 2021) and the recent collapse in many Technology companies’ performance in China
illustrates this. The tech sector and internet platforms have become a major political
focus in both the US and China – the markets with the highest concentration of
large-cap Technology stocks. The most recent news on the DOJ subpoena of Nvidia in
its antitrust probe, and the share price reaction, is an example of the impact that such
news can have on highly rated growth companies.

Social attitudes towards tech companies may also be changing as they are seen
increasingly as gaining huge profits while employing relatively few people. The
continued rise in the profit share of GDP relative to the labour share of GDP leads
(Exhibit 22) into the narrative that many of the most profitable companies need reigning
in, or taxing more. Many of these companies that were historically difficult to tax are
becoming easier targets as they build up large data centers and physical capital. As
Exhibit 21 shows, their profits have increased by much more than their tax rates in
recent years. Governments will be keen to find new sources of tax revenue and the
increasingly high energy demands of the major technology leaders might be seen as a
justification for higher taxes. According to the International Energy Agency, data centers
16
already account for about 1% to 1.5% of global electricity use .

Exhibit 21: Technology’s share of net income has increased relative Exhibit 22: US profit and labour share of GDP
to the share of taxes paid
Ex Diversified Financial Services, Investment Trusts and Real Estate
(USD)

20% Information Technology as a % of MSCI World 10 59

18% 58
8
16%
Profit 57
14%
6 56
12%
55
10% 4
54
_

8%
2 53
6%
52
4% Tax share 0
51
2% Profit Share (%) Labour Share (%, RHS)
-2 50
0%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 1929 1942 1955 1968 1981 1994 2007 2020

Source: FactSet, Datastream, Worldscope, Goldman Sachs Global Investment Research Source: Datastream, Goldman Sachs Global Investment Research

Our US strategists’ analysis of company stock performance following previous antitrust

lawsuits by the DoJ and FTC shows that revenue growth slowed, valuation compressed
and shares underperformed the overall index (Exhibit 23, Exhibit 24). However, the
cases took years to resolve and share price response was often muted during the initial
stages. The most prominent examples include AT&T, where a break-up was mandated
by a consent decree following eight years of litigation (1974-82); MSFT, where a
settlement was reached involving a consent decree and changed business practices

16
Leffer, L. (2023). “The AI Boom Could Use a Shocking Amount of Electricity”.

5 September 2024 22
 Goldman Sachs Global Strategy Paper

following three years of litigation (1998-2000/01); and IBM, where no formal action was
taken after 13 years of litigation (1969-82) — see: US Equity Views: Equities, antitrust,
and the “inestimable” value of due process, 13 July 2021.

Exhibit 23: Historical examples of regulatory scrutiny

AT&T and IBM relative valuation reflect LTM P/B vs. S&P 500 median. Microsoft relative valuation reflects NTM P/E
vs. Info Tech median.
Average sales growth Relative valuation
Lawsuit Pre- Post- Lawsuit At
Company Resolution Years Resolution Change Change
filing resolution resolution filing resolution

AT&T 1974 1982 8 Breakup 10% 4% -6% 1.3 x 0.9 x -31%

Microsoft 1998 2000/2001 2-3 Consent decree 39% 10% -29% 1.8 x 0.9 x -50%
IBM 1969 1982 13 No formal action 14% 5% -9% 4.9 x 1.9 x -61%

Source: Goldman Sachs Global Investment Research

Exhibit 24: Relative valuation following antitrust lawsuit filing

Change in relative valuation. Based on trailing P/B. IBM and MSFT relative to Info Tech. AT&T relative to S&P 500.

40%

40%

20%
20%
IBM
0% 0%

-20%
-20%
AT&T
-40%
-40%
-60%
MSFT
-60%
-80%

-80%
0 2 4 6 8 10 12 14 16 18 20 22 24
Months since lawsuit filing
_

Source: Compustat, Goldman Sachs Global Investment Research

Nevertheless, we see three reasons why dominant tech companies may stay
bigger for longer in the current cycle than we might have seen in historical
technology cycles:

1) The tech sector is deflationary (Exhibit 25). As long as that is the case, there is no
real incentive for politicians to attack it. In this way, the tech sector from a policy
perspective may be different from others, such as banks, supermarkets or energy
companies, where politicians often argue that the benefits (for example of higher
interest rates for savers, or lower food and energy prices) are not being passed on to
consumers. This does not make technology companies immune from regulation, but it is
more likely to come from issues around privacy and use of data, or the impact on
mental health, than on pricing.

5 September 2024 23
 Goldman Sachs Global Strategy Paper

Exhibit 25: The tech sector is deflationary

US Communication CPI vs All CPI (1997=100)

120

US Communication CPI vs ALL CPI

100

80

60

40
1998 2002 2006 2010 2014 2018 2022

Source: Haver Analytics, Goldman Sachs Global Investment Research

2) Technology is increasingly seen as an issue of national security. Technology,

including cyber security, chips and increasingly AI, are seen as a critical part of national
infrastructure and strategic defense. This has become more important as geopolitical
tensions rise across the world, making it less likely that a government would support
anti-trust legislation that undermines a competitive lead. For example, the US in its
Foreign Direct Product Rule (FDPR) allows US officials to control the flow of foreign
products built with US-originated technology. IBM recently has announced the closure
of its China R&D operation with the loss of 1,000 jobs, and there are recent news
reports that ASML will put more curbs on its China business.

3) The technology sector invests hugely in R&D. Given that the current incumbent
winners are so cash-generative, they have an ability to maintain this investment,
_

strengthening their market ‘moat’ and also potential future growth. According to Erik
Brynjolfsson, Professor and Senior Fellow at the Stanford Institute for Human-Centered
AI, the top 10% of firms by market value account for over 60% of this intangible digital
investment (see Top of Mind: The post-pandemic future of work, 29 July 2021). “They’re
pulling further away from firms at the median and bottom, so that inequality is growing
over time. That’s leading to a ‘winner-take-most’ outcome in which superstar firms are
harvesting most of the gains from new technologies rather than those insights diffusing
evenly throughout the economy. And that’s also happening at the level of individuals and
workers — the labour share of income has fallen in recent decades, and the top 1% is
getting ever wealthier as they capture a growing share of total income”.

Our analysts also see significant opportunities for secondary growth opportunities in
cloud computing coming from AI. They estimate that the Cloud Software TAM (IaaS,
PaaS, and SaaS) could approach $2 trillion by 2030 (CAGR: 22%, 2024-2030). Their
analysis suggests Gen-AI spending could constitute 10–15% of the Cloud Software

5 September 2024 24
 Goldman Sachs Global Strategy Paper

market ($200-$300bn) as spending gradually extends beyond the hyper-scalers and

foundation model providers to become more pervasive across all three layers of the tech
stack (see: Gen-AI Part VIII: Catalyst or Culprit?, 25 Aug 2024).

Opportunities for Diversification

Ex Tech Compounders (ETCs)
While technology may not be in a bubble, the characteristics of large cap technology can
be found in a more diverse and diversified portfolio. It is true that few companies match
the earnings growth that the largest tech companies have been enjoying; however,
there are plenty of companies that do have high margins and returns on investment,
reinvest for future growth and have strong balance sheets that exist outside of the tech
sector. We call these the Ex Tech Compounders, or ETCs.

We have put together a list of global ETCs, which can be found in the Appendix. The list
looks for companies that have market caps above $10bn and have high margins (EBITDA
> 14%, EBIT > 12%, Net Income > 10%), high profitability (ROE > 10%), strong balance
sheets (ND/Equity < 75%, ND/EBITDA < 2x), low volatility (Vol < 50), strong growth
prospects (sales > 4% and earnings > 8%) and have consistently grown their earnings
over the past decade.

As Exhibit 26 shows, the ETCs have outperformed the global market over the past year
and have kept pace with the performance of the ‘Magnificent 7’. The valuation of our
global ETCs list is in line with its average since 2016 and the list trades at the lowest
premium to the world stock market since 2018.

Exhibit 26: The Global Ex Tech Compounders (ETCs) have Exhibit 27: ...and since 2015
outperformed the global market over the past year... Ex. Tech Compounders (ETCs). Relative total return performance.
Total return performance. Indexed to 100 on Jan-21.

220 190
GRANOLAS
Ex. Tech Compounders (cap-weighted) vs. MSCI AC World
Magnificent 7 180
200
Ex. Tech Compounders (cap-weighted) 170
180 MSCI AC World
160
_

150
160
140
140
130

120 120

110
100
100

80 90
Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 15 16 17 18 19 20 21 22 23 24

Source: Datastream, Goldman Sachs Global Investment Research Source: Datastream, Goldman Sachs Global Investment Research

Healthcare and Biotech

One area likely to benefit from AI and the ability to analyse large data sets is healthcare
and bio technology. We have already seen very dramatic reductions in the costs of DNA
sequencing (Exhibit 28) with the cost of sequencing an entire gnome falling from $100

5 September 2024 25
 Goldman Sachs Global Strategy Paper

million in 2001 to $50 in 2022 . The pace of this reduction far outpaces Moore’s law and
17

suggests a significant increase in the productivity and cost of developing new medicines
and therapeutic discoveries (). AI has also been instrumental in speeding up data
processing in the development of vaccines. For example, linearFold, an algorithm for
ribonucleic acid (RAN) secondary structure recognition, increased the speed times for
Covid-19 sequencing from 55 minutes to 27 seconds 18
.

The healthcare industry and biotech have significantly underperformed large cap US tech
companies in recent years, suggesting that the opportunities are not fully reflected in
valuations (Exhibit 29). Our healthcare analysts believe that AI can accelerate synthetic
data generation for drug development and diagnostics, generating designs for novel
drugs, personalised medicine, diversity and equity in healthcare, manufacturing and
supply chain efficiency, and approval and launch materials.

Exhibit 28: Cost of sequencing DNA of one human genome Exhibit 29: The healthcare industry and biotech have significantly
USD underperformed large cap US tech companies in recent years
Total return performance. Indexed to 100 on Jan-21.

100000000 220
Magnificent 7
200 MSCI World Healthcare
10000000
Moore's Law MSCI World Biotech
180
1000000

160
100000
140

10000
120

1000
Cost per Genome (USD) 100

100 80
2000 2004 2008 2012 2016 2020 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24

Source: National Human Genome Research Institute, US National Institute of Health, Data Source: Datastream, Goldman Sachs Global Investment Research
compiled by Goldman Sachs Global Investment Research

Banks and Financial Services

Our analysts see: 1) Enhanced coding efficiency, 2) Data extraction: Synthesise data and
_

content from large datasets or documents, 3) Chatbots, 4) Automation, 5) Human/AI

collaboration. In Europe, for example, our banks team estimate the potential AI adoption
uplift to ROE at c.200bp (excluding the upfront investment required). They highlight the
AI impact is most clearly driven by numerous modest cost gains, with the cost
opportunity c.3x the revenue opportunity.

Consumer Products and Services

Academic work points to only a small proportion of the social returns from
technological advances over the 1948-2001 period being captured by producers,
indicating that most of the benefits of technological change are passed on to consumers
rather than captured by producers. These results indicate that the bubble of

17
National Human Genome Research Institute (2024). “DNA Sequencing Costs: Data”.
18
Baidu Research (2020). “Opening up world’s fastest RNA structure prediction algorithm to the scientific
community to support battle against coronavirus”.

5 September 2024 26
 Goldman Sachs Global Strategy Paper

new-economy stocks in the 1990s resulted from the alchemist fallacy 19

.

This was evident in the case of the internet. Waves of new products and services
emerged in the years after the bubble burst with the emergence of the smart phone
and apps. Arguably, many of these products did not answer an urgent problem that
needed to be solved but rather developed new products that then created demand –
ride-sharing, platform business, social media and so on. It is likely that a similar pattern
will develop with AI.

Robotics and Cyber Security

According to Cybercrime Magazine, cybercrime would have a value equivalent to the
third-largest economy globally, at $10.5 trillion annually by 2025, while Statistica
suggests it will rise to $13.8 trillion by 2028. The demand for cyber security will rise
dramatically and AI can help in this process.

Current processes cannot keep up with the volume of malware, estimated at around 1
billion programmes with 560,000 new pieces each day according to DataProt 20
. AI
21
automation can help to detect and differentiate between those that are most harmful .

Our analysts expect Security vendors to emerge as beneficiaries across both the
infrastructure and application layers as well as within data posture investments as
security continues to trend higher as a percentage of total budgets.

In robotics, a whole range of other applications driven by emerging companies might

become large markets —autonomous driving, for example, or humonoid robotics,
enhanced by AI. Already advances are evolving rapidly and according to industry
22
estimates the global market for humanoid robots could reach £214bn by 2032 .

Of course, it is not possible to anticipate what these products may be or who is likely to
develop them, but that is another reason for ensuring broad diversification in equity
exposure as well as balanced portfolios have access to private markets where many of
the nascent companies may be.
_

Ethics and nostalgia markets

In past technology cycles, the second-round impacts on work and society often drive
new areas of consumer growth. It is likely, for example, that more AI will mean more
demand for fact-checking services. The ability to work more productively from home
may mean the regentrification of shopping and entertainment in neighbourhoods close
to large-density populations. The growth of artificial immersive entertainment may also
boost demand for experiences in the real world. This might reflect the growing
popularity of goods and services that are seen as ‘authentic’ or nostalgic. Retro ‘crafts’
are growing in popularity, whether it be the growth reality TV programmes where

19
Nordhaus, William D. (2005). “Schumpeterian Profits and the Alchemist Fallacy”. Yale Economic
Applications and Policy Discussion Paper No. 6, SSRN Electronic Journal.
20
Jovanovic, B. (2024). “A Not-So-Common Cold: Malware Statistics in 2024”. DataProt.
21
Morgan, Steve (2020). “Cybercrime To Cost The World $10.5 Trillion Annually By 2025”.
22
The Brainy Insights (2023). “Humanoid Robot Market Size Worth $214.4 Billion by 2032: The Brainy
Insights”.

5 September 2024 27
 Goldman Sachs Global Strategy Paper

contestants compete in baking, spelling, sowing or even ballroom dancing competitions.

These fashions are spreading into retail. According to Grand View Research, for
example, the market for so-called ‘artisanal’ bakery products was valued globally at
$95.13 billion in 2022 and is likely to grow at a compound rate of 5.7% from 2023 to
2030 23. The focus on sustainability and interest in the past together create new
consumer markets. According to research conducted by GlobalData for ThredUP, a US
second-hand store, the resale clothes market is growing at 15 times the rate of
traditional retail 24. According to a report by Statistica, as of 2021, 42% of millennials and
Gen Z respondents stated that they were likely to shop for second-hand items 25
.

A similar trend has emerged in transport with the growth in the ‘sharing’ economy and
the growth of cycle, scooter and car sharing. Few would have predicted the steady
growth in the bicycle market a decade ago; the global bicycle market was valued at over
$64 billion in 2022 and is expected to grow at a compound rate of 9.7% from 2023 to
2030 26. Perhaps even more striking is how the bicycle is outselling the car. Analysis of
30 European countries by the Confederation of the European Bicycle Industry (CONEBI)
and the European Cyclists Federation (ECF) suggests that, at the current trajectory, 10
million more bikes will be sold per year in Europe by 2030, representing a rise of 47%
compared with 2019. On this basis, the 30 million bikes sold annually in Europe would
be more than double the annual sales of cars .
27

Ethically produced products and services is also a growing market and AI can help.
Research from Bain found that 7% of consumers in rich developed countries are willing
to pay a premium for sustainably sourced products and brands 28
. AI can help develop a
supply chain inventory, making it easier for companies to prove provenance and quality
of their components and ingredients.

In the 21st century, in a highly digitalised world where almost everyone is connected to
the internet and the cutting edge of technology threatens to displace jobs and
companies, it is meaningful that one of the biggest company in Europe is LVMH. This is
a company that sells the value of heritage in historic brands. It was formed in 1987
through the merger of two old companies: Louis Vuitton (founded in 1854) and Moet
_

Hennessey, which itself was a merger in 1971 between Moet & Chandon, the
champagne producer (founded in 1743) and Hennessey, producer of cognac (founded in
1765). According to its website, the company develops the brands that ‘perfectly
encapsulate all that they have embodied for our customers for centuries’.

23
Grand View Research (2023b). “Artisanal Bakery Products Market Size, Share and Trends Analysis Report,
2023–2030”.
24
ThredUp 2024 Resale Report.
25
Smith, P. (2022). “Female consumer willingness to buy secondhand apparel by age worldwide 2019”.
Statista.
26
Grand View Research (2023a). “Bicycle Market Size, Share and Trends Analysis Report, 2023–2030”.
27
Sutton, M. (2020, December 2). “Annual bike sales to run at more than double new car registrations by
2030”. Cycling Industry News.
28
Faelli, F., Blasbeg, J., Johns, L., and Lightowler, Z. (2023). “Selling Sustainability Means Decoding
Consumers”. Bain & Company.

5 September 2024 28
 Goldman Sachs Global Strategy Paper

As the ubiquity of technology increases and individuals increase their reliance on

technology as they communicate via networks, the value they place on
‘authenticity’ and human connectivity – which can evoke a nostalgic image of a
simpler, pre-digital life – is likely to grow. This is true across many product
categories, including food.

The old economy and infrastructure

Increasingly, the ambitions of large cap tech companies are dependent on greater
electricity generation and infrastructure. Many of the companies that stand to benefit
from this trend are in the ‘old economy’ and have much lower valuations, having
stagnated and disappointed for many years. AI could continue to boost returns in the
Technology space, but for these companies to fulfill their potential, they will need huge
increases in electrical power (and, with it demand for infrastructure spend and copper).
Our analysts estimate that data center power demand is poised to grow 160% by the
end of the decade, which should drive a significant acceleration to a level of electricity
growth in the US and Europe not seen in a generation (see GS Sustain: AI/data centers’
global power surge and the Sustainability impact, 28 April 2024).

After stagnating over the last decade, our US utilities analysts expect US electricity
demand to rise at a 2.4% compound annual growth rate (CAGR) over 2022-2030, with
data centers accounting for roughly 90bp of that growth, and data centers will likely
more than double their electricity use by 2030. This implies that the share of total US
power demand accounted for by data centers will increase from around 3% currently to
8% by 2030, translating into a 15% CAGR in data center power demand from
2023-2030. A similar trend is in play in Europe and Asia. Our European utilities analysts
also expect a secular capex supercycle ahead with European investments in power grids
accelerating by 80-100%, depending on the region. And on the renewables front, they
expect Europe to add nearly 800 gigawatts (GW) of wind and solar over the coming
10-15 years, nearly tripling the amount currently installed in the region (see: Gen AI: Too
much to spend, too little benefit?, 25 June 2024).

Decarbonisation and an energy transition is what is needed to generate this

_

power. But to do this, a capex super cycle is needed that will benefit many of the
left-behind value sectors.

5 September 2024 29
 Goldman Sachs Global Strategy Paper

Appendix
Criteria for Global Ex. Tech Compounders:

n Constituents of MSCI AC World

n Excludes GS Sell-rated companies
n Large cap (Mkt Cap > $10bn)
n High margins (EBITDA > 14%, EBIT > 12%, Net Income > 10%)
n High profitability (ROE > 10%)
n Strong balance sheets (ND/Equity < 75%, ND/EBITDA < 2x)
n Volatility (5y Realised Vol < 50)
n Growth prospects (sales > 4% and earnings > 8% 2y forward CAGR) and
consistently grown their earnings over the past decade
n Based on consensus estimates
_

5 September 2024 30
 Goldman Sachs Global Strategy Paper

Exhibit 30: Ex. Tech Compounders

Ex. Tech Compounders
Name GICS Sector US vs. Non-US Region Country Market Cap ($bn) 12m fwd P/E
Eli Lilly Health Care US North America United States 903.2 45.9
Novo Nordisk B Health Care Non-US Europe Denmark 456.0 34.2
LVMH Moet Hennessy Louis Vuitton Consumer Discretionary Non-US Europe France 356.5 20.9
AstraZeneca Health Care Non-US Europe United Kingdom 266.2 19.3
Novartis Health Care Non-US Europe Switzerland 260.8 15.1
Kweichow Moutai A Consumer Staples Non-US Asia/Pacific Ex Japan China 247.2 18.6
Hermes International Consumer Discretionary Non-US Europe France 243.7 45.6
L'Oreal Consumer Staples Non-US Europe France 232.3 29.5
Linde Materials US North America United States 226.0 28.6
Intuitive Surgical Health Care US North America United States 171.7 65.9
Inditex Consumer Discretionary Non-US Europe Spain 165.5 24.0
Stryker Health Care US North America United States 137.2 27.7
Honeywell International Industrials US North America United States 133.7 19.2
Vertex Pharmaceuticals Health Care US North America United States 123.0 39.9
Boston Scientific Health Care US North America United States 120.3 30.9
Eaton Industrials US North America United States 115.2 26.8
Automatic Data Processing Industrials US North America United States 112.0 27.1
Air Liquide Materials Non-US Europe France 108.0 25.3
FAST RETAILING Consumer Discretionary Non-US Japan Japan 101.0 39.5
CSL Health Care Non-US Asia/Pacific Ex Japan Australia 99.1 29.7
NIKE B Consumer Discretionary US North America United States 96.9 25.2
Ferrari Consumer Discretionary Non-US Europe Italy 94.3 51.4
Zoetis A Health Care US North America United States 83.0 29.4
Cintas Industrials US North America United States 80.4 46.7
Hindustan Unilever Consumer Staples Non-US Asia/Pacific Ex Japan India 79.5 57.3
Cie Financiere Richemont Consumer Discretionary Non-US Europe Switzerland 79.3 19.5
Daiichi Sankyo Health Care Non-US Japan Japan 79.2 47.3
Trane Technologies Industrials US North America United States 77.7 29.2
ITC Ltd Consumer Staples Non-US Asia/Pacific Ex Japan India 75.4 28.0
Parker-Hannifin Industrials US North America United States 73.8 22.1
Chipotle Consumer Discretionary US North America United States 72.9 45.7
Copart Industrials US North America United States 51.3 32.6
Sika Materials Non-US Europe Switzerland 50.4 31.1
Oriental Land Consumer Discretionary Non-US Japan Japan 49.7 46.0
Monster Beverage Consumer Staples US North America United States 47.6 25.7
HOYA Health Care Non-US Japan Japan 47.5 32.6
WW Grainger Industrials US North America United States 46.3 23.6
Experian Industrials Non-US Europe United Kingdom 43.8 29.1
Old Dominion Freight Line Industrials US North America United States 41.9 30.6
Edwards Lifesciences Health Care US North America United States 41.7 24.7
UltraTech Cement Materials Non-US Asia/Pacific Ex Japan India 39.8 35.8
Grupo Mexico B Materials Non-US Latin America Mexico 39.7 9.2
WEG Industrials Non-US Latin America Brazil 39.7 35.0
AMETEK Industrials US North America United States 38.7 24.1
IDEXX Laboratories Inc Health Care US North America United States 38.6 41.4
Howmet Aerospace Industrials US North America United States 38.2 31.5
Asian Paints Materials Non-US Asia/Pacific Ex Japan India 36.9 57.5
ResMed Health Care US North America United States 36.0 26.6
Beiersdorf Consumer Staples Non-US Europe Germany 35.6 28.3
Ingersoll Rand Industrials US North America United States 35.4 25.1
Veeva Systems A Health Care US North America United States 34.8 33.0
ASSA ABLOY B Industrials Non-US Europe Sweden 33.7 22.1
Martin Marietta Materials Materials US North America United States 31.2 25.3
Vulcan Materials Materials US North America United States 30.9 27.9
Celltrion Health Care Non-US Asia/Pacific Ex Japan Korea 30.8 39.9
HEICO A Industrials US North America United States 30.1 46.2
_

Aena SME Industrials Non-US Europe Spain 30.1 14.0

lululemon athletica Consumer Discretionary US North America United States 29.8 17.6
Nestle India Consumer Staples Non-US Asia/Pacific Ex Japan India 29.1 67.5
Wabtec Industrials US North America United States 28.6 20.7
DexCom Health Care US North America United States 27.9 36.2
Terumo Health Care Non-US Japan Japan 27.7 28.9
ANTA Sports Products Consumer Discretionary Non-US Asia/Pacific Ex Japan China 27.2 14.2
Axon Enterprise Industrials US North America United States 26.8 65.6
Fortive Industrials US North America United States 25.2 18.5
Rollins Industrials US North America United States 24.5 45.8
STERIS Health Care US North America United States 23.7 25.5
Aristocrat Leisure Consumer Discretionary Non-US Asia/Pacific Ex Japan Australia 23.1 21.3
Straumann Holding Health Care Non-US Europe Switzerland 22.6 34.6
Deckers Outdoor Consumer Discretionary US North America United States 22.6 28.5
Evolution Consumer Discretionary Non-US Europe Sweden 21.0 15.5
Sonova Holding Health Care Non-US Europe Switzerland 20.9 26.3
Symrise Materials Non-US Europe Germany 18.7 32.3
Genmab Health Care Non-US Europe Denmark 18.4 20.1
Nongfu Spring H Consumer Staples Non-US Asia/Pacific Ex Japan China 17.5 20.3
Expedia Group Consumer Discretionary US North America United States 17.1 10.1
James Hardie CUFS Materials Non-US Asia/Pacific Ex Japan Australia 16.0 23.4
Moncler Consumer Discretionary Non-US Europe Italy 15.9 21.2
Nordson Industrials US North America United States 14.2 25.4
Cochlear Health Care Non-US Asia/Pacific Ex Japan Australia 13.0 45.7
Neurocrine Biosciences Health Care US North America United States 12.6 20.6
Teleflex Health Care US North America United States 11.6 16.3
Fortune Brands Innovations Industrials US North America United States 9.5 17.3
Median 39.7 28.0

Source: Datastream, FactSet, Goldman Sachs Global Investment Research

5 September 2024 31
 Goldman Sachs Global Strategy Paper

Disclosure Appendix
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 Goldman Sachs Global Strategy Paper

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5 September 2024 34
 MINDCRAFT: OUR THEMATIC DEEP DIVES
The Future of Europe’s Energy The Circular
Batteries Carbonomics Crisis China Agriculture Precision Farming Green Capex Economy

Cars: The Road

Byte-ology Gene Editing The Metaverse Cloud Computing 5G Blockchain Ahead

China’s Credit Age of China

Music in the Air China Property Conundrum Automation China Post-95s Silicon Carbide Decarbonization

The Survivor’s Guide Sustainable ESG What Matters

to Disruption Investing Black Womenomics Inclusive Growth Market Cycles Top of Mind for IPOs
_

Tracking the The Future

Top Projects Consumer EU Taxonomy Balanced Bear Clean Hydrogen Green Metals of Work

What the Market The Competitive

Pays For The Great Reset Value of Data