Goldman names three stocks to buy in the information services sector because of generative A.I.
Goldman Sachs recommended buying three information services stocks that should be helped by artificial intelligence. Analyst George Tong scored how business and information services companies can deploy generative AI and analyzed the revenue impacts from the technology on these businesses. With that framework in mind, he recommended buying S & P Global , CoStar and Gartner , giving investors another group of stocks with AI exposure to consider as growing market excitement boosts stocks with ties to the technology. "We believe generative AI will have a profound and varied impact on the Business & Information Services sector over the medium-to-longer term," he said in a note Wednesday to clients. SPGI IT,CSGP YTD mountain Tong's three buys so far this year S & P Global could need fewer workers due to AI, Tong said, given that companies focused on data and report writing stand to save the most in labor costs with the technology deployed to do some jobs previously done by humans. He said it's also one of the service-sector stocks that can benefit most from the automation of business communications . And S & P Global's AI research lab Kensho, which has been creating machine learning technology for the company since it was acquired in 2018, gives the company a "competitive advantage," he said. S & P Global has outperformed the broader market this year with a 17.8% gain. Every analyst on Wall Street with a rating on the stock has given it a buy, according to Refinitiv. Tong said IT stock Gartner should also be a top beneficiary of AI-related labor savings given the company's focus on data and writing. AI should also be useful in creating more research content, he said. At the same time, Tong said, demand for AI-related research should only grow, which should provide a boost to the company's technology research arm. Gartner is also up year to date but has underperformed the broader market at just 5.2% higher. Half of analysts rate the stock a buy, while the other half have hold ratings, according to Refinitiv. Real estate stock CoStar has some protections from the threats of generative AI due to the ownership of its assets, Tong said, with data generated in house. But AI should be able to help increase functionality in CoStar's suite of products and make the online market more user-friendly through features such as improved search functions and a chatbot. CoStar shares have also underperformed the broader market in 2023, up 6% this year. The majority of analysts rate the stock a buy, per Refinitiv. On the other hand, Tong said he would sell Robert Half and H & R Block . — CNBC's Michael Bloom contributed to this report.