AI Investment Boom to Slow Down S&P 500 Earnings Growth

Goldman Sachs warns that nearly half of this year's S&P 500 earnings growth is due to the AI investment boom, but this momentum will gradually fade next year. In a recent report, Goldman Sachs' chief U.S. equity strategist, Ben Snider, stated that approximately 50% of the earnings growth of S&P 500 companies in 2026 stems from the AI investment boom.

The AI investment boom has driven exceptional profits for tech companies, particularly those in the semiconductor industry, which have benefited from both surging demand and constrained supply. However, Snider believes that profit margins in this industry will not persist indefinitely.

Goldman Sachs projects that by 2027 and 2028, the S&P 500 companies' earnings per share growth will slow to just 11%, a significant deceleration from the 51% increase in the second quarter of this year. The firm estimates that under adverse scenarios, such as a decline in chip prices, U.S. corporate earnings could shrink by approximately 10%.

In its baseline scenario, Goldman Sachs forecasts that U.S. equities' earnings per share will rise by 11% in both 2027 and 2028, reaching $415 and $460 respectively.