Squawk on the Street+ Goldman Sachs Chairman & CEO David Solomon 5/6/24

David Faber (0:00)

We are continuing our coverage from the Milken Institute Global Conference. Joining me now is David Solomon. He's the Chairman and CEO of Goldman Sachs. And it's good for you. It's good for me to have you back. We missed a year because we've made this somewhat of an annual tradition. So thank you for being here, David.

David Solomon (0:14)

Absolutely. I'm happy to be here and happy to be with you. I've been at this event for a long time.

David Faber (0:20)

Yes, you have.

David Solomon (0:20)

And it keeps growing, so I'm happy to be here.

David Faber (0:22)

It is enormous.

And a lot obviously that we're going to be discussing here. In fact, I mentioned this earlier, AI is going to certainly be one of the topics that is explored in depth here at the conference. And I noticed on your conference call from the middle of April, after you reported very strong numbers of Goldman Sachs, you decided to spend a lot of time on it. It was right up there in the top of your initial remarks. You called it a comes up in virtually every client conversation I have, you said, artificial intelligence. Why did you choose to sort of spend so much time on AI in the Goldman call?

David Solomon (0:59)

Well, I mentioned it, and if I mentioned anything on that call, it gets an amplification because it's something that our clients are talking actively about because the changes, the transformation in compute is accelerating at such a pace, and the implications on productivity and efficiency in business are going to be enormous. We've been using AI, David, and you and I have talked about this for 20 years in our business in some way, but what's changed now is the power of the compute that's available, the speed and therefore your ability to apply it in different ways.

So I think there's an enormous productivity opportunity, there are obviously efficiency opportunities, and also if you think about the amount of capital that's going to be necessary to implement this, the amount of energy and power that's going to be necessary to implement it, this is something that people are going to have to think very strategically about, and that's something that Goldman Sachs helps our clients with. So it's a big opportunity.

David Faber (1:52)

There are enormous financing needs.

David Solomon (1:54)

Enormous financing needs, and that's Goldman Sachs.

David Faber (1:57)

Where do you think we are when it comes to those needs, whether it's building of the data centers or to your point, the infrastructure to actually power them, which is becoming more and more of a crucial issue.

David Solomon (2:08)

We're very early in that journey, candidly, and I think one of the things that businesses are thinking about, one of the things that governments are thinking about is where is a lot of that capacity going to be housed.

When you think about certain data center capacity that we've used for certain things in the past, latency has been very important, but here it's not as clear latency is important. You need land, you need access to power, you need space, you actually need a regulatory environment that can be quite constructive to the implementation of all of this. And I think we're early in the journey. I think it's a global issue, and it's something we're focused on because our clients are focused on it. I think we've got an ability to help them think through these issues and ultimately help finance this build-out, which is going to be hugely important for business in the world.

David Faber (2:48)

I mean, those capex numbers from the hyperscalers are just mind-boggling, those numbers.

David Solomon (2:53)

Incredible.

David Faber (2:54)

Back to AI in your business, so David, you talked about use cases that you're testing and implementing, focusing, as you just said, you used the two words, on productivity and efficiency. So when we talk about this larger sort of generative AI and what it may mean, it's not going to mean a reduction in jobs?

David Solomon (3:11)

You know, I think that the first focus for this, David, is just productivity. We are a knowledge organization. We're a professional services firm. We have an enormous number of smart, talented people all over the world.

If you give them tools that allow them to expand their capacity to focus on things that are valuable for our clients, they can actually take on more. And it's just a silly analogy, but think back to when we started. If I go back to when I started 40 years ago, it took six hours to do a common stock comparison. Now it takes an instant. It doesn't mean over that journey we've had less people focused on our clients. So productivity, the ability to take smart people, give them tools so they can do more, do more quickly, help our clients think about things in different ways.