Goldman Says The AI Spending Boom is Now a Risk to S&P 500 Returns

Goldman Sachs warns that massive AI infrastructure spending by major tech companies is eroding their profitability and threatens S&P 500 valuations. While semiconductor manufacturers benefit from strong chip demand, cloud operators face unprecedented capital expenditures ($770B in 2026) that strain cash flow and compress margins. The largest tech companies' return on equity is expected to decline by seven percentage points next year, directly challenging current stock valuations that depend on sustained profitability.