AI Spending Slowdown Could Pressure S&P 500 Earnings
Goldman Sachs estimates that AI investment drives almost half of 2026 S&P 500 earnings growth, because one company's capital spending becomes another's revenue. Supplier profits track the year-over-year increase in spending, and Goldman expects capex growth to slow from 94% in 2026 to about 17% by 2028. Risks include higher rates, debt-funded spending, state data center restrictions, and weak AI returns.
Goldman Sachs calculates that AI-related investment accounts for nearly half of the S&P 500's projected earnings expansion in 2026. The mechanism is circular: when one firm spends on capital projects, that outlay becomes revenue for suppliers, so supplier earnings depend on the yearly change in spending rather than its absolute size.
Goldman's forecast shows AI capex growth decelerating from 94% in 2026 to roughly 17% by 2028. Other factors may dilute the broader economic effect: imported components, unusually high chip margins, and about $150 billion in unrealized gains. Potential reversal risks include rising interest rates, borrowing-financed investment, state limits on data centers, and disappointing AI returns.
A slowdown in AI capital spending could ripple beyond Wall Street. Because retirement accounts, pensions, and index funds often hold S&P 500 companies, weaker earnings may affect household portfolios and retiree incomes. Technology suppliers, construction workers, and data-center host communities might see less demand or hiring if projects pause. Meanwhile, consumers and businesses could still benefit if AI tools become cheaper or more useful, though disappointing returns or higher borrowing costs may force firms to cut other investments. The effects would likely vary by region and income group.