Goldman: AI Fears Heighten S&P 500 Vulnerability as Terminal Value Hits 25-Year High

Goldman Sachs warns AI disruption fears are forcing investors to rethink S&P 500 valuations, where terminal value—profits beyond 10 years—now makes up 75% of equity value, near a 25-year high. The software & services sector has plunged 17% year-to-date amid concerns over AI-driven revenue and margin pressures. A 1 percentage-point drop in long-term growth assumptions could cut enterprise value by 15%, hitting high-growth stocks hardest with potential 29% valuation losses versus 10% for low-growth ones. Goldman sees this AI debate and terminal value uncertainty persisting for quarters.