Goldman Sachs Says This 1 Stock Is Set to Be the Biggest AI Productivity Winner

The Goldman Sachs Group (GS) is seeing an intriguing new way to play the artificial intelligence (AI) boom, shifting attention from the chipmakers and infrastructure providers that have dominated the trade toward companies that can use AI to cut labor costs while lifting productivity. 

Following Q2 earnings, Goldman refreshed its AI Productivity Beneficiaries basket after screening Russell 1000 companies for two traits that could make AI especially valuable. They were high labor costs relative to sales and significant exposure of their wage bills to AI automation. 

In here, CoStar Group (CSGP) topped the ranking, making it the standout name in Goldman's productivity-focused basket. Goldman estimates that 37% of CoStar's wage bill faces exposure to AI automation, while labor costs account for 31% of sales, giving the company an average sector ranking of 97%. 

These figures make the productivity argument rather hard to ignore, especially since CoStar has already started putting AI to work across its operations. During Q2 FY2026, CoStar launched CoStar Rent Benchmark, a tool built from four million AI-abstracted lease agreements, while its Apartments.com AI recorded more than 500,000 AI sessions within weeks of release. 

Users spent nearly three times longer per session while viewing twice as many listings, giving CoStar a promising early read on AI-driven engagement. CEO Andrew Florance said the company is already seeing more cost savings from AI than increases from token costs. So, let’s take a closer look at what puts CoStar ahead.

About CoStar Stock

Headquartered in Arlington, Virginia, CoStar is a global provider of real estate data, analytics, digital marketplaces, and technology solutions. Commanding a market cap of $12.7 billion, its portfolio includes CoStar, LoopNet, Homes.com, Apartments.com, Ten-X, Land.com, and BizBuySell. 

These platforms help professionals research properties, study markets, manage portfolios and leases, and facilitate transactions, giving the company a broad footprint across the real estate industry.

However, its stock has endured a particularly rough stretch, falling 63.8% over the past 52 weeks while plunging 52.5% year-to-date (YTD). The decline stemmed mainly from mounting investor concerns that AI could erode CoStar's data moat, along with broader worries about its Homes.com strategy and competitive pressure.

Despite the bruising decline, CSGP stock is currently trading at 23.06 times forward adjusted price-to-earnings. The multiple sits below the industry average, which puts the stock at a discount.

A Closer Look at CoStar’s Q2 Earnings

CoStar shares gained nearly 4% on July 28 after the company released its Q2 FY2026 results, with revenue climbing 18.4% year-over-year (YOY) to $925 million. The figure fell short of Street expectations of $929.3 million, although CoStar still extended its impressive streak to 61 consecutive quarters of double-digit revenue growth.

Commercial revenue reached $481 million, representing a 7.8% YOY increase while landing in line with management's guidance. Residential revenue came in at $444 million, marking a much stronger 32.5% YOY increase while also remaining within the guidance range provided by management.

Also, Q2 brought what CoStar described as a profitability inflection point, with adjusted EBITDA more than doubling YOY to $184 million. That result marked the second highest quarterly level in company history while producing a 20% adjusted EBITDA margin, an impressive 900 basis point improvement from the previous year.

Moreover, CoStar managed to keep operating cost growth to just 2% YOY while continuing to invest across numerous long-term growth initiatives. At the same time, adjusted net income surged 73% YOY to $128 million, while adjusted EPS grew 88.2% from the year-ago value to $0.32 and beat Wall Street expectations of $0.28.

For Q3 FY2026, CoStar expects revenue between $935 million and $945 million, with the midpoint representing a 13% YOY increase. Adjusted EBITDA is estimated to range from $190 million to $210 million, while the midpoint implies an adjusted EBITDA margin of 21%, and adjusted EPS guidance stands at $0.31 to $0.34.

For full-year FY2026, CoStar revised its previous revenue guidance to $3.715 billion to $3.755 billion, with the midpoint representing a 15% YOY increase. Management said the revised outlook reflects recent operating decisions aimed at driving profitable long-term growth.

Analysts also see earnings accelerating sharply from here, with Q3 FY2026 EPS expected to rise 145.5% from the previous year’s quarter to $0.27. Full-year FY2026 EPS is projected to grow 100% from the prior year, reaching $1.06, while analysts expect another 33% YOY increase in FY2027, taking projected EPS to $1.41.

What Do Analysts Expect for CoStar Stock?

Analysts remain upbeat on CoStar, assigning its stock an overall rating of “Moderate Buy.” Among 20 analysts covering the name, nine recommend a "Strong Buy," one assigns a "Moderate Buy," nine suggest investors "Hold," while one flags a “Strong Sell.”

To that end, the average price target of $35.74 implies potential upside of 11%. Meanwhile, the Street-High target of $52 points to a possible gain of 61.5% from current levels.