Goldman Sachs Says Half of S&P 500 Earnings Growth Is Driven by AI Spending
Goldman Sachs chief U.S. equity strategist Ben Snider highlighted that approximately half of the earnings growth in the S&P 500 is being driven by artificial intelligence (AI) capital expenditures, according to a report from Goldman Sachs. This concentration means index performance heavily relies on continued spending cycles led by major hyperscalers like NVIDIA and Broadcom. NVIDIA reported Q2 FY27 revenue of $96.22 billion, up 105.8% year-over-year, with data center sales reaching $89.02 billion. Similarly, Broadcom’s AI semiconductor revenue surged to $16.70 billion in Q3, a 221% increase from the previous year. Microsoft is also heavily involved as an end buyer of this infrastructure. The SPDR S&P 500 ETF Trust (SPY) remains near highs despite recent volatility and trades at a compressed P/E ratio of 19x. However, Goldman warns that if hyperscalers reduce their AI spending, the earnings growth underpinning the index could slow significantly.
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Topics: AI Broadcom Goldman Sachs analysis Microsoft NVIDIA S&P 500 earnings growth