AI Earnings Boom Loses Steam as S&P 500 Faces Reality Check

Goldman Sachs has warned that the AI earnings boom is losing steam as the S&P 500 faces a reality check in 2027. According to Ben Snider, Goldman's chief U.S. equity strategist, the AI investment boom has accounted for nearly half of S&P 500 earnings growth this year.

The bank expects the forces responsible for this growth to weaken next year, even if companies continue spending heavily on data centers, chips, and other AI infrastructure.

Snider wrote that 'the AI investment boom has accounted for nearly half of S&P 500 earnings growth this year, and this tailwind should begin to fade next year even as capex spending continues to grow.'

The concern is not about a collapse in AI demand but rather that continued investment may produce diminishing incremental earnings growth for the companies supplying the infrastructure.

Goldman also expects the recent surge in semiconductor profit margins to weaken, creating another potential earnings headwind alongside semiconductor prices and margins.