Goldman Sachs sees S&P 500 earnings growth slowing as AI spending momentum fades

what happened

According to Seeking Alpha, citing a Goldman Sachs research report dated October 30, S&P 500 companies continue to post strong profits, but the acceleration that pushed stocks higher is coming to an end. With 60% of index members having reported third-quarter results, earnings per share are up 33% from a year earlier. The bank expects S&P 500 earnings growth of nearly 30% in 2026, easing to roughly 18% in 2027.

Goldman Sachs estimates that major hyperscale technology companies will spend about $800 billion on capital expenditures in 2026, nearly double the prior year, and another 44% more in 2027, to around $1.2 trillion. Growth in that spending is slowing, however, and analysts have largely stopped raising their forecasts. The five largest hyperscalers together posted negative free cash flow of about $31 billion in the third quarter.

Since the earnings season began, the S&P 500 has fallen 3%, while the index excluding AI-related companies has risen 5%.

why it matters

The key question for investors is whether technology stock prices already reflect too much good news. For semiconductor makers and power suppliers that serve AI infrastructure, the estimates point to earnings growth that stays very high but gradually slows.

market impact

S&P 500: slowing profit and AI spending growth weighs on tech stocks while the rally broadens

• ↔S&P 500 mixed — strong reporting supports the market, but slowing earnings growth limits the gains

instruments