Goldman Sachs Warns of AI-Driven Earnings Bubble in Tech Sector

Goldman Sachs' top global equity strategist, Peter Oppenheimer, is warning that an AI-driven 'earnings bubble' may be forming in the technology sector. In a report published on Thursday, titled 'Competition for Capital,' Oppenheimer argues that the problem isn't what investors are paying for stocks but rather whether the earnings themselves can hold up.

The report sharpens his earlier thesis from August that an AI-driven 'earnings bubble' may be forming. He ties this risk to a specific mechanism: competition between private AI infrastructure spending and government borrowing for the same pool of capital. Oppenheimer notes that this stress is already visible in the bond market turbulence seen this month.

Oppenheimer still stops short of declaring the bubble definitively exists, but his hedge has been backed up by hard data. This includes capital expenditure figures showing technology companies are spending at an extraordinary clip, record credit issuance, and a downgraded near-term outlook for equities.