The spread of artificial intelligence may make finding a great growth stock challenging in the near future.<\/p>\n
“We expect investor uncertainty around AI disruption and long-term growth estimates will persist for quarters if not years, requiring investors to be selective within the universe of secular growth stocks,” Goldman Sachs strategist Ben Snider warned in a new note.<\/p>\n
“For secular growth stocks facing AI disruption risk, resolving this uncertainty will likely require evidence that AI is not displacing existing business models.”<\/p>\n
Growth stocks have been hit from all sides this year, from AI disruption fears to high AI spending to higher-for-longer interest rates amid the US conflict with Iran.<\/p>\n
The “Magnificent Seven” stocks sport valuations near fresh lows relative to the S&P 500 (^GSPC<\/a>), JPMorgan strategist Mislav Matejka pointed out in a note last week.<\/p>\n “Mag 7 relative [to S&P 500] is not acting as a safe haven,” Matejka said.<\/p>\n The Magnificent Seven is a group of seven cash-rich, large-cap technology stocks that have collectively dominated the US stock market and driven the majority of the S&P 500’s gains since 2023. It includes Nvidia (NVDA<\/a>), Amazon (AMZN<\/a>), Tesla (TSLA<\/a>), Microsoft (MSFT<\/a>), Google (GOOG<\/a>), Apple (AAPL<\/a>), and Meta (META<\/a>).<\/p>\n The only two Magnificent Seven stocks up this year are Amazon and Google, each sporting marginal gains. Tesla has been the worst-performer with a 23% plunge.<\/p>\n Goldman’s Snider said Meta, Amazon, and Google could regain their growth stock stride given their leadership positions in tech, yielding strong results this year and next.<\/p>\n Meanwhile, software stocks have been obliterated as the “SaaSpocalypse” rolls on.<\/p>\n This market event has erased about $2 trillion in market capitalization from software stocks this year. Investors are realizing that generative AI \u2014 specifically “agentic” AI \u2014 is no longer just an add-on but a potential replacement for traditional software.<\/p>\n The crisis has fundamentally broken the “per-seat” subscription model. If an AI agent can do the work of five people, a company only needs one software license instead of five, leading to a “seat compression” that has decimated recurring revenue projections.<\/p>\n ServiceNow (NOW<\/a>) shares have crashed 48% this year, Salesforce (CRM<\/a>) is down by 36%, and DocuSign (DOCU<\/a>) has shed 42%.<\/p>\n “Put simply, we see risk that concerns around software application architecture, business model durability and terminal value intensify in the months ahead,” Citi analyst Tyler Radke wrote in a new note. “Privately held AI companies are on track to add $100 billion plus of net-new revenue in the years ahead, materially eclipsing the $50 billion of traditional application software.”<\/p>\n","protected":false},"excerpt":{"rendered":"The spread of artificial intelligence may make finding a great growth stock challenging in the near future. “We…\n","protected":false},"author":2,"featured_media":4112,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,3908,25,1296,3907,3906,3288],"class_list":{"0":"post-4111","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ai","8":"tag-ai","9":"tag-ai-disruption","10":"tag-artificial-intelligence","11":"tag-goldman-sachs","12":"tag-growth-estimates","13":"tag-growth-stock","14":"tag-software-stocks"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/4111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=4111"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/4111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/4112"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=4111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=4111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=4111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}