Investing.com -- Goldman Sachs CEO David Solomon addressed AI project financing challenges and political concerns during the bank's quarterly earnings call on Tuesday.

Solomon said it would be interesting to watch for political volatility around AI centers ahead of midterm elections. He noted that as financing needs for AI projects grow and there is pressure on rates, it could affect the returns and viability of certain projects.

The CEO said demand for compute significantly exceeds supply at the moment in conversations with clients. Goldman Sachs remains highly selective about the risk it underwrites on AI and the capital it commits, particularly as client financing needs become larger and more complex, Solomon added.

The bank recognizes broader concerns around the accelerating pace of AI technology and the unchecked advancement of frontier models, Solomon said.

On the broader economic outlook, Solomon said the health of the U.S. economy remains solid. The bank's deals backlog remains very robust, he noted.

Solomon said renewed geopolitical tensions and continued disruption of energy flows added complexity to the outlook. Financing activities have become a larger and more durable component of the bank's markets businesses, he added.

The CEO said a 5% 10-year Treasury yield does not scare him in terms of an operating environment. Goldman Sachs CFO said if there was more interest rate volatility, that could create headwinds.

On mergers and acquisitions in asset and wealth management, Solomon said the bank's bar for strategic, financial, and cultural fits remains very high.

The CEO confirmed there is no succession transition or timeline at Goldman Sachs.

Original Article