Goldman Sachs’ latest forecast: Is the market headed for a broad downturn?
Goldman Sachs is telling you the AI party is over, while also saying rate hikes will continue.
Break it down and there are two blows.
The first targets AI: Goldman says AI investment’s share of GDP will peak in early 2027, while S&P 500 earnings growth will be cut in half, from 36% this year to 11%.
Capital spending growth among tech giants will fall from 96% to 44%. The “pick-and-shovel” sellers—chipmakers and server companies—will be hit first, with information technology earnings growth slashed from nearly 90% to 45%.
Put simply, the AI story isn’t dead, but the words “growth is no longer accelerating” are enough to send valuations to their knees.
The second blow targets interest rates: October CPI came in above expectations for the third month in a row. Goldman has now added a third rate hike, in March 2027, to its forecast, putting the peak rate at 3.25% to 3.5% and pushing rate cuts back to the end of 2027. Money will stay expensive, and that’s exactly what high-valuation AI assets fear most.
For now, don’t chase AI hardware; the outlook favors defensive positions. Cloud giants trading below 20 times earnings are actually more resilient than the pick-and-shovel sellers. The only option is to short them at elevated levels after a rebound. If you want to short, keep an eye on the chip and server companies whose earnings growth is being cut the most. $SOXL $KORU $SNDK #加息预期仍强，FOMC纪要会否再添鹰派信号？
Goldman Sachs is telling you the AI party is over, while also saying rate hikes will continue.
Break it down and there are two blows.
The first targets AI: Goldman says AI investment’s share of GDP will peak in early 2027, while S&P 500 earnings growth will be cut in half, from 36% this year to 11%.
Capital spending growth among tech giants will fall from 96% to 44%. The “pick-and-shovel” sellers—chipmakers and server companies—will be hit first, with information technology earnings growth slashed from nearly 90% to 45%.
Put simply, the AI story isn’t dead, but the words “growth is no longer accelerating” are enough to send valuations to their knees.
The second blow targets interest rates: October CPI came in above expectations for the third month in a row. Goldman has now added a third rate hike, in March 2027, to its forecast, putting the peak rate at 3.25% to 3.5% and pushing rate cuts back to the end of 2027. Money will stay expensive, and that’s exactly what high-valuation AI assets fear most.
For now, don’t chase AI hardware; the outlook favors defensive positions. Cloud giants trading below 20 times earnings are actually more resilient than the pick-and-shovel sellers. The only option is to short them at elevated levels after a rebound. If you want to short, keep an eye on the chip and server companies whose earnings growth is being cut the most. $SOXL $KORU $SNDK #加息预期仍强，FOMC纪要会否再添鹰派信号？
