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Goldman Sachs: Asian AI stocks remain attractive on low valuations and earnings growth
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Goldman Sachs' chief Asia-Pacific equity strategist, Timothy Moe, stated that AI-related stocks in Asia remain attractive despite rising government bond yields. Moe noted that the firm is in the 'stronger for longer' camp, citing projected capital expenditures by hyperscale cloud service providers of approximately $800 billion this year, rising to $1.2 trillion by 2027, as a key demand signal for the Asian AI hardware supply chain. He added that the region's 'very low' valuations, with a price-to-earnings ratio of around 10 times, provide additional support, and that earnings growth will offer a buffer against higher interest rates. For the remainder of the year, Moe expects markets to be 'somewhat bumpy' ahead of the U.S. midterm elections, with rising energy prices and geopolitical risks adding pressure. However, he forecasts a rebound by year-end driven by earnings growth and valuations.
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Timothy Moe, Chief Asia Pacific Equity Strategist at Goldman Sachs, has stated that artificial intelligence (AI)-related stocks continue to present attractive opportunities, even amid rising government bond yields.
"We are clearly in the 'stronger for longer' camp," Moe said, noting that capital expenditure by hyperscale cloud service providers is expected to reach approximately $800 billion this year and rise to around $1.2 trillion by 2027. He described this as a key demand signal for Asia's AI hardware supply chain.
Moe also highlighted that "very low" valuations in Asia provide additional support. The region's overall price-to-earnings (P/E) ratio stands at approximately 10 times, near the lower end of its historical range. He added that earnings growth would also serve as a buffer against higher interest rates.
Looking ahead to the remainder of the year, Moe expects the market to be "somewhat bumpy" before the U.S. midterm elections, with rising energy prices and geopolitical risks adding pressure. However, he anticipates that after this period, the market could stage a rebound by year-end, driven by earnings growth and valuations.
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Goldman Sachs: AI stocks attractive, $800B cloud capex supports Asia hardware chain