The AI industry’s profit problem is getting bigger, says Goldman Sachs’ equity research chief The AI sector is experiencing a significant investment cycle, driven by rapid advancements and widespread adoption. However, Goldman Sachs’ Jim Covello notes that the business case for AI remains unproven, with companies increasingly losing money on implementation due to a fear of falling behind competitors. While semiconductor companies have seen substantial profits, those further up the AI supply chain have yet to demonstrate comparable economic returns.

• Massive investment is fueling one of the biggest technology cycles in decades, driven by AI.
• The business case for AI remains unproven, with companies increasingly losing money on implementation.
• Spending on AI has outpaced proven returns, driven by fear of being left behind (FOMO).
• Semiconductor companies have captured outsized profits, unlike companies higher in the AI supply chain.
• Cloud providers are increasing AI-related capital expenditures despite debates about future returns. Continue reading https://www.businessinsider.com/goldman-sachs-ai-boom-profit-problem-semiconductor-chip-companies-investment-2026-6