From Fortune Magazine:

Wall Street has been influenced by the hype surrounding artificial intelligence, with tech leaders like Microsoft and Nvidia seeing a surge in stocks and earnings. The question on many investors’ minds is how long this hype will last. Goldman Sachs’ chief global equity strategist, Peter Oppenheimer, points to history for insight on navigating the AI boom, drawing parallels to the rise and decline of canal stocks in the 18th century. Canals revolutionized transportation, leading to economic growth, but the initial bubble eventually burst. Oppenheimer offers two key lessons for AI investors based on the history of canal stocks: networking effects take time, but AI may have a shorter impact window because it builds on existing technologies like the internet; the companies that benefit most from technological revolutions are not the first-movers laying the groundwork, but those who use the technologies to develop new products and services. Therefore, while giants like Microsoft and Nvidia are currently benefiting from AI, it may be the smaller companies that leverage AI to create new products and services that become the long-term winners. Oppenheimer’s advice to investors is to diversify their holdings carefully.



Read more: AI’s winners and losers have a historical precedent: The canal boom of the 18th century