AI Spending Drives Surge in US Stock Issuance

Goldman Sachs analysts have identified a surge in stock issuance by U.S. companies, driven primarily by artificial intelligence (AI) spending. According to data from Goldman Sachs, U.S. companies raised $252 billion through initial public offerings (IPOs), follow-on offerings, convertible securities, and Special Purpose Acquisition Companies (SPACs) in the second quarter of this year.

This figure surpasses the quarterly record of $234 billion set in the first quarter of 2021. Goldman Sachs strategist Ben Snider noted that the increase in equity supply is more a return to normal levels rather than a surge threatening the market, as it remains below the historical average relative to the size of the overall stock market.

The AI sector has become a major driving factor for new stock issues, with companies related to AI accounting for about 40% of U.S. follow-on equity issuance this year, according to Goldman Sachs' analysis. This trend is expected to continue, with capital expenditures by hyperscale cloud companies projected to exceed $1 trillion annually in the coming years.

Goldman Sachs estimates that if capital expenditures reach $1.4 trillion next year as some investors expect, even with significant cash flow acceleration, the financing gap for these firms will still exceed $300 billion. However, the bank noted that recent earnings reports from Amazon, Google, Meta, and Microsoft also show that their revenues and operating cash flows still have upward potential.

Stock issuance is not expected to be the core source of external funding for AI infrastructure construction, with Goldman Sachs credit strategists expecting hyperscale cloud firms to cover 35% of their capital expenditures through debt financing by 2027. This could result in global bond issuance reaching about $400 billion next year and remaining at similar levels in the coming years.