These Companies Will Benefit From AI the Most—or Die Trying

(Michael M. Santiago/Getty Images)

Key Points

• Goldman Sachs identified companies in the Russell 1000 with high labor costs and AI exposure, excluding direct AI businesses.
• H&R Block, a tax preparer, scored highest on Goldman’s screen, with a potential AI earnings per share boost of 51%.
• Regional banks like U.S. Bancorp and PNC are on the list, possessing customer relationships and balance sheets AI cannot replace.

Artificial intelligence is going to change the way many U.S. companies do business. That could mean big profit gains for some—and existential threats for others.

Tech giants such as Alphabet and Meta are pouring hundreds of billions of dollars into AI. The market will get its latest snapshot of the situation on Wednesday, when chip maker Nvidia —whose wildly popular GPU chips power many AI models— reports third-quarter earnings. In the meantime, investors have rightly started to wonder which “real-world” companies will actually benefit from the nascent technology. One way to determine that is to look at companies with higher labor costs whose workforce is also exposed to AI automation.

In a report Tuesday, Goldman Sachs tried to answer the question by screening the Russell 1000 index or these such companies. Goldman said it limited the screen to companies that mentioned AI in recent earnings calls, and excluded businesses with direct AI exposure, such as tech firms actually building AI models or companies providing closely-related infrastructure.

The results highlight the opportunities and risks for investors. The list was rich with banks and professional service firms—but the single highest score belonged to tax preparer H&R Block .

Goldman’s screen suggests the stock, which is trading at just 10 times forward earnings, enjoys a potential AI earnings per share boost of 51%. On H&R Block’s most recent conference call, president Curtis Campbell mentioned “our investment in AI moving forward and our ability to actually improve the productivity of our Tax Pros.” The company added that its AI Tax Assist service, a product for DIY filers, had become one of its key offerings.

Still H&R Block stock has dropped 20% in the past 12 months, and it’s not hard to see a future where AI ends up disrupting—rather than empowering—the tax prep industry. On Tuesday, Intuit, parent of rival tax service TurboTax, said it signed a $100 million deal with OpenAI to help market credit cards, personal loans, and answer tax questions.

Similarly, Rocket Cos., which also ranked high on Goldman’s list, became one of the U.S. largest mortgage originators because its online and mobile tools simplified paperwork-heavy mortgage applications for millions of stressed home buyers. The stock has gained 26% in the past year, and the market seems to be betting its technology can prove equally compelling in the AI era. But Rocket will almost certainly have to reinvent its popular tools—and sooner or later an AI native competitor almost certainly challenge it the same way Rocket once challenged traditional lenders.

Of course, not all firms on Goldman’s list face such stark threats. Regional banks, such as U.S. Bancorp and PNC, have customer relationships, branches, and balance sheets that AI will never be able to replace.

In addition to banks and other capital goods firms, Goldman’s list included a number of services firms, among them Accenture, Booz Allen Hamilton Holding, and Verisk Analytics, as well insurers Arthur J. Gallagher and Marsh & McLennan.

One thing is clear: The AI revolution will almost certainly have unpredictable consequences.

Write to Ian Salisbury at ian.salisbury@barrons.com