The stock market is far ahead of the economy in reflecting the value of AI

Goldman Sachs Technology, Media and Telecommunications (GSTMTAIP) Artificial Intelligence Index has fallen about 8% in the past two weeks, marking the largest decline since the first quarter. The S&P 500 Index is just 2% away from its peak. Goldman Sachs research indicates that AI-driven productivity could lead to strong growth over the next decade, potentially increasing U.S. GDP and earnings by about 15%. However, since 2022, the market value of AI-related industries has grown by approximately $18-19 trillion, nearing the upper limit of long-term growth expectations. The AI story is not over, but the threshold for the next round of growth is higher, and the current pullback is more impactful than in the first quarter