Goldman Sachs said Trump’s tariffs will affect tech budgets. Sheridan claimed spending on artificial intelligence will be protected due to competition in the industry. The Goldman executive used Meta as an example, revealing the firm raised capital expenditure guidance and confirmed artificial intelligence as its key focus amid tariff concerns.
According to Eric Sheridan, an executive at Goldman Sachs, AI will hit hiring and marketing departments the most. Sheridan said Trump’s tariffs will not have any impact on AI spending.
The Goldman Sachs executive said spending on artificial intelligence is protected due to competition within the industry. Sheridan cited Meta’s earnings report, which was released last week. He said Meta increased capital expenditure guidance and affirmed AI as its main focus.
Goldman Sachs says tariffs won’t impact AI spending
While appearing in a Goldman Sachs Exchange podcast, Eric Sheridan, a co-business unit leader at the firm, revealed that Trump’s tariffs will not impact AI spending. Sheridan highlighted hiring and marketing as the key departments that would be hit by tariffs imposed by U.S. President Donald Trump.
He stated that macro would end up with higher volatility on operating expenses, such as headcount and marketing expenses.
“I think given the sheer number of players investing both offensively and defensively at AI, I think this spend will get protected for a little longer than the macro environment might influence it,”
The Goldman Sachs executive said he expected firms’ spending on artificial intelligence to get more protection. He explained that given the sheer number of firms pooling their funds into AI, this spending will be protected for a longer time than the macro environment can influence it.
Sheridan cited Meta’s earnings reported last week. While announcing the first-quarter earnings, Meta affirmed its focus on AI data centers and infrastructure. The firm also increased its guidance for capital expenditure from $60 billion to $65 billion to $64 billion to $72 billion.
Mark Zuckerberg, the CEO of Meta, said the company was focusing on AI. Meta also lowered guidance for other expenses, such as salaries and marketing spending, to the $113 billion to $118 billion range from $114 billion to $119 billion.
Sheridan argued that the message revealed by the firm continued to find efficiencies within the organization. He added that the firm was not at a point where it could sacrifice long-term investments simply because the macro environment would be a certain way for a couple of months.
Meta talked about its AI abilities. The firm promised its AI would benefit its customers and their own targeting and engagement. Sheridan said that the same approach was also witnessed at Google.
The Goldman Sachs unit leader revealed how revenue growth attracts investors. He said Google Cloud experienced 28% growth, AWS 17%, and Microsoft Azure 30%. Sheridan said these were the types of growth rates that would grab the attention of investors because there was a direct correlative payout.
Sheridan talks about increased AI usage
Sheridan also addressed concerns regarding Alphabet’s AI. The Goldman Sachs executive revealed he had talked to Alisson before about AI. Sheridan said that Alphabet’s AI was already coming up with ads, placing them as expected, and gauging the ads.
He added that AI was also harvesting data from the ad transactions, processing it, and then repeating the process countless times. Sheridan revealed that advertising was getting more efficient as a result of AI. He said that return on ad spend was increasing while affirming that firms needed to spend more on AI to earn their target returns.
Sheridan explained how Alphabet had been able to launch AI overviews in the last few months. He praised Gemini for having a standalone app and an interface on the desktop. The executive revealed that tracked data showed human beings were asking questions to computers at a higher rate than they have ever tried since ChatGPT launched. He affirmed that the percentage of people asking AI questions had increased.
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