Goldman Sachs' Chief Strategist Warns of AI-Driven Earnings Bubble with Hard Data
Peter Oppenheimer, Goldman Sachs’ chief global equity strategist, has reinforced his earlier warning about an earnings bubble in technology stocks by providing concrete data. In a new report titled 'Competition for Capital,' he argues that the risk stems from intense competition between AI infrastructure spending and government borrowing for limited capital resources. This dynamic is driving up the cost of capital globally. Oppenheimer cites significant increases in capex among high-rated tech companies, record levels of convertible bond issuance linked to AI projects, and a surge in investment-grade debt forecasts as evidence supporting his thesis. He connects these trends with rising policy rates due to inflationary pressures from energy costs, creating a convergence that could strain capital availability. The warning aligns with broader concerns on Wall Street about the sustainability of current market conditions. Torsten Slok at Apollo Global Management has similarly noted a shift from a 'savings glut' to a 'capital shortage,' suggesting higher yields are becoming necessary as investment opportunities outpace available funds.
Topics: bond market capital allocation stock market technology stocks valuation