S&P 500 Earnings Set for Deceleration as AI Capex Fades

The S&P 500 earnings have been on a tear, but Goldman Sachs sees deceleration rather than an earnings collapse. According to their forecast, EPS will rise by 11% to $415 in 2027 and another 11% to $460 in 2028.

AI capex has supplied an extraordinary earnings tailwind, but rising depreciation means that contribution falls from 11 percentage points in 2026 to a marginal drag by 2028. Semiconductor margins are the sharper earnings fault line, and a return toward historical gross margins could remove roughly 10% from S&P 500 earnings.

Goldman Sachs strategist Ben Snider notes that there's a difference between saying the S&P 500 is over-earning and saying it's inside an earnings bubble. Earnings have indeed gone vertical by historical standards, but the bank's base case is that growth slows rather than falls off a cliff.