AI capital expenditures peak as global stock market profits"shift gears"! Goldman Sachs outlines three major themes for 2027

According to news from Zhihui Finance APP, Goldman Sachs Portfolio Strategy Research Department pointed out that as the artificial intelligence investment boom peaks, global stock market profit growth is expected to fall by more than half in 2027; however, the recent valuation corrections have created attractive entry points for long-duration technology growth stocks.

2026: A rare year of universal gains

2026 will bring a rare market-wide rally across regions, reversing more than a decade of sustained U.S. outperformance. Robust corporate earnings are driving markets higher globally, fueled by three factors: solid profits from the technology sector, rising oil prices boosting commodities, and the spillover effect of the AI capital expenditure frenzy—which is lifting industries such as industrials with heavy assets and low churn rates.

However, this momentum is fading rapidly. Goldman Sachs’ top-down calculations show that in 2027, earnings growth in all major markets will fall by more than half: S&P 500 EPS growth will slow from 32% to 16%, Europe from 24% to 8%, Japan from 22% to 13%, and MSCI Asia Pacific (ex-Japan) from 77% to 30%.

Root cause of the slowdown: Hyperscaler capital expenditure peaks

The core of the slowdown is the peaking of capital expenditures by hyperscalers—their contribution to S&P 500 EPS growth is expected to drop from 12 percentage points in 2026 to 9 percentage points in 2027. Meanwhile, rising depreciation costs and high borrowing costs are squeezing profit margins.

Goldman Sachs points out that recent price movements have already reflected much of this slowdown. Global equity valuations have generally contracted, and price-to-earnings ratios are now close to the 35-year average. Large U.S. hyperscalers currently have a forward P/E ratio of about 19.7 times, cheaper than traditional defensive sectors like consumer staples, while maintaining healthy balance sheets—their net debt-to-equity ratios are much lower than the market average.

Regional allocation: Overweight US and Japan, underweight Europe

On a risk-adjusted basis, Goldman Sachs is overweighting the US and Japan, neutral on Asia-Pacific (ex-Japan) and emerging markets—the latter being more volatile due to heavy index concentration in storage chip stocks in South Korea and Taiwan—and underweighting Europe, due to concerns about government debt and a busy political calendar.

Three major investment themes

Goldman Sachs’ core advice centers around three themes. First, growth stocks—including large U.S. hyperscalers, AI monetization beneficiaries, and “power plays” related to electricity—the demand for electricity from AI data centers is becoming a new bottleneck.

Second, select defensive stocks such as healthcare, “buyback aristocrats” (companies conducting sustained large-scale buybacks), as well as European utilities and telecom operators.

Third, beneficiaries sensitive to interest rates, including UK real estate and retailers—should bond yields and oil prices retreat moderately, these assets stand to benefit directly.