Goldman Sachs analysts believe the worst of the profit margin reset for the S&P 500 is likely behind us. Q1 margins came in above Street expectations and in line with pre-COVID levels. The analysts don’t see “substantial” potential for near-term margin expansion, but they are optimistic about the long-term potential of artificial intelligence (AI) tools to boost net margins by nearly 400 bp over a decade. They caution, however, that the economic impact of AI and the regulatory response it may elicit is uncertain.
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