Goldman Sachs analysis shows S&P 500 earnings grew 51% YoY in Q2 2026, driven by massive AI infrastructure spending by hyperscalers and elevated semiconductor margins, but characterizes this as temporary over-earning rather than a bubble. Earnings are expected to decelerate from 2027 onward as capex growth slows, depreciation drags increase, and semiconductor margins normalize from historically high levels.
Goldman Sachs analysis shows S&P 500 earnings are temporarily elevated but not in a bubble, driven by hyperscaler AI capex spending reaching $800 billion in 2026. Earnings growth will decelerate from 2027 as capex growth slows and depreciation drags increase, with semiconductor margin expansion and unrealized investment gains also normalizing.
Goldman Sachs research indicates AI investments are driving nearly half of S&P 500 earnings growth this year, but this contribution is expected to diminish. Hyperscaler capital expenditures are projected to continue growing but at a slower pace in 2027.