According to Goldman Sachs analyst Peter Oppenheimer, the global economy is on the brink of a new "super cycle" driven by artificial intelligence (AI) and decarbonization. This marks a departure from the drivers of the previous super cycle that began in the 1980s.
The current super cycle was characterized by a peak in interest rates and inflation, followed by nearly 35 years of low interest rates. Additionally, the end of the Cold War reduced geopolitical risks, industries were deregulated, and globalization reshaped international trade and finance. However, Oppenheimer believes that the factors underpinning the new super cycle will be different.
Interest rates are not declining as aggressively, globalization is facing criticism, and geopolitical risks are increasing. Instead, Oppenheimer points to AI and its impact on productivity, as well as decarbonization, as significant drivers of the new super cycle.
The AI boom, which led to triple-digit gains in the stock prices of tech companies like Nvidia and Meta last year, is expected to continue to influence markets as the technology becomes more widespread across various sectors of the economy. Oppenheimer argues that tech companies at the forefront of the AI boom are relatively cheap compared to past tech bubbles, and he believes this trend will have a significant impact in the coming years.
The other aspect of the upcoming global growth cycle is decarbonization. Oppenheimer notes that as the physical demands of our world change due to climate change, economies are being pushed to restructure and modernize. This shift towards decarbonization is expected to drive economic growth.
Overall, Oppenheimer's analysis suggests that the global economy is entering a new era of growth driven by AI and decarbonization. While the factors that fueled the previous super cycle are no longer as influential, these new drivers have the potential to spur a period of significant expansion.