Forget AI hype. Look at profitability, revenue growth, and cash returns instead. Goldman Sachs research and hedge fund practices show most investors chase headlines while actual stock performance tells a different story.
you look at profitability, revenue growth, which is what we do, and that's why we have all this data and we make it available to clients. When we look at the valuation of a company, the revenue growth of a company, the cash return on capital invested of a company, consistency of returns, that gives us data. I don't look at companies by the seat of my pants. And when we look at these factors, because that one comes from Goldman Sachs Wealth Management, these come from Nobel Prize winners in economics, this comes from the hedge fund industry, That is a far better way to judge whether or not markets are overvalued or what moves markets, because valuation isn't the only thing, and whether AI is overspent or not. So we try and avoid saying stupid things, and anything which is not based on evidence or data tends to be pretty stupid as a thing to say. So if we look at something like what's happening on the AI front at the moment, and I'm going to show you the stocks which are doing well, which are doing poorly, and those outside of AI, non-tech companies doing well, doing poorly, It'll give you a better picture that what the headlines are saying and what retail clients are thinking is not actually what's happening. And that's what's been surprising and shocking to me as well. I can only make my judgments based on the same data I show you. I don't just suddenly have some epiphany in the middle of the night or— okay, so profitability, that's the key factor. And I've written about this on my LinkedIn column, my LinkedIn article as well. Keep an eye on profitability, revenue growth.
