AI Disruption Risks Prompt Valuation Reassessment for S&P 500

Analysts at Goldman Sachs are warning that the rapid evolution of artificial intelligence is forcing a fundamental rethink of long-term corporate growth projections in the United States. The bank notes that terminal value—profits expected beyond the next decade—now accounts for approximately 75% of the S&P 500's total equity value, a level that mirrors the extreme optimism seen during the dotcom boom. The software sector has already begun to reflect these anxieties, with the S&P 500 software and services index declining roughly 17% year-to-date. This downturn is largely attributed to the rollout of new AI tools, such as those from Anthropic, which automate critical functions in marketing and data analytics, thereby threatening the traditional revenue models of software providers. Goldman's sensitivity analysis reveals a high degree of vulnerability to shifting expectations. According to the bank, a mere one percentage point reduction in assumed long-term growth would slash the combined enterprise value of S&P 500 companies by approximately 15%. The impact would be disproportionately severe for high-growth stocks, which could see valuations drop by 29%, compared to a 10% decline for lower-growth companies. The bank expects the uncertainty surrounding AI adoption to remain a persistent overhang for several quarters. Additionally, Goldman pointed out a lack of transparency from corporate leadership, noting that only 5% of S&P 500 companies currently address financial expectations extending beyond a five-year horizon during earnings calls.