Goldman Sachs CEO Warns Of Potential ‘Drawdown’ Amid AI-driven Market Boom
Goldman Sachs CEO David Solomon has cautioned that some investors could face losses in the coming “drawdown” from the equity market surge fueled by artificial intelligence (AI), CNBC reported.Speaking at the Italian Tech Week in Turin on October 3, Solomon drew parallels with the early 2000s dotcom boom, noting that rapid adoption of transformative technologies often leads to cycles of market highs and corrections.
“Markets run in cycles, and whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation, you generally see the market run ahead of the potential … there are going to be winners and losers,” Solomon said.
He said that while mass adoption of the internet in the late 1990s created tech giants, it also triggered the dotcom bubble.
Solomon said the AI-driven market rally could see a similar pattern. “I wouldn’t be surprised if in the next 12 to 24 months, we see a drawdown with respect to equity markets … a lot of capital that’s deployed will turn out to not deliver returns, and when that happens, people won’t feel good,” he said.
While he refrained from labeling the current AI surge as a “bubble”, Solomon warned that investor excitement could overshadow risks. “When investors are excited, they tend to think about the good things that can go right and diminish the things you should be sceptical about that can go wrong … There will be a reset, there will be a check at some point, there will be a drawdown,” he said.
Despite the cautionary tone on market cycles, Solomon expressed optimism about AI’s long-term potential. “I sleep very well. Generally speaking, I think what’s super exciting is the technology is expanding, new companies are being formed, and the potential of this technology deployed into the enterprise can be very, very powerful. So, it’s an exciting time,” he said.
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