Is It Time to Buy the Dip in AI Stocks? Goldman Sachs Thinks So

Since DeepSeek made its splash in the US stock market, the AI sector has taken a significant hit—down 17.5% from its peak. But now, Goldman Sachs is saying this might be the best time to buy into AI since last summer.

Goldman is making a bold call here. They argue that, despite all the current pessimism surrounding AI stocks, the fundamentals—earnings expectations, valuations, and industry outlook — are all signaling a prime buying opportunity. They believe that if DeepSeek's success can be replicated or even just built upon, AI adoption will accelerate, drawing more players into the field.

What's more, Goldman predicts that AI-related earnings will outpace the S&P 500 over the next 12 to 24 months. That's a pretty strong endorsement, especially considering how beaten down AI stocks are right now.

But here's where it gets even more interesting — AI's massive electricity demand. Goldman's utilities research team has flagged a surge in investor inquiries about how much power AI will consume. And despite all the worries, the fundamentals supporting data center electricity demand haven't changed. Utilities are still reporting strong demand, and there's no sign of a slowdown.

In fact, Goldman forecasts that US electricity demand will grow at 2.5% annually through 2030, with data centers (AI and non-AI) contributing about 100 basis points of that growth. Even if you strip out all AI-related demand, they still expect 2% annual growth—which is massive. And that power has to come from somewhere.

When it comes to supplying that power, natural gas is shaping up to be a key player. John Mackay, Goldman's natural gas and pipelines analyst, argues that natural gas is the most realistic solution in the medium term because of its reliability and speed to market. Basically, it can be brought online much faster than other energy sources, making it crucial for data center developers trying to keep up with demand.

On the renewable energy side, Goldman Sachs' Nick Cash predicts that solar will account for over 50% of new power generation capacity. He points out that solar, especially utility-scale projects, is currently the cheapest and fastest-to-build energy source—taking just 12-18 months to complete, compared to 4-5 years for gas turbines and 8-10 years for new nuclear plants.

Goldman Sachs' analysis certainly presents a compelling case for buying into the AI sector, particularly AI power. The combination of strong fundamentals, a potentially undervalued segment, and the expected growth in returns makes it an intriguing opportunity. However, as always, it's important to consider the risks and do your own due diligence.

Goldman is not only bullish on AI itself, they're also highlighting the power sector—especially natural gas and solar — as smart ways to ride the AI wave. AI-driven earnings growth looks strong, and the power infrastructure is a critical, often overlooked part of that story.

Personally, I think this is a compelling argument. Sure, the AI sector has taken a beating, but the long-term growth drivers are still intact. If you're looking for a buy-the-dip opportunity, this might be it. And if you're not ready to jump straight into AI stocks, consider the power sector — it's the backbone of AI's growth, and valuations are some of the most attractive we've seen in a while. #artificialinteligence