Key facts
- The AI investment boom has accounted for nearly half of S&P 500 earnings growth this year.
- Goldman Sachs strategists expect this tailwind to begin fading next year.
- Slowing AI infrastructure investment, increasing supply, or technological shifts could lower semiconductor prices and profit margins.
- A significant reduction in 'other income' from private investments is expected to drag S&P 500 earnings growth in 2027.
Wall Street has been buoyed by upbeat earnings this year, largely driven by the technology sector. However, Goldman Sachs strategists believe this momentum may not last, with the AI investment boom expected to contribute less to S&P 500 earnings growth in the coming year.
According to Ben Snider, the bank's chief US equity strategist, the AI investment boom has been responsible for nearly half of the S&P 500's earnings growth in the current year. He anticipates that this positive influence will begin to wane next year, even if capital expenditure continues to rise.