13:40
Goldman Sachs Interprets the "Post-Modern" Investment Cycle: AI and Geopolitics Driving Capital Expenditure SupercycleBlockBeats News, June 17th – Goldman Sachs believes that the world is transitioning from the “modern” supercycle characterized by low inflation, low interest rates, and globalization, to a “post-modern” era with higher macroeconomic volatility, higher real interest rates, increased government intervention, and more pronounced regionalization. In this environment, the era of relying on valuation expansion to drive returns is ending, and earnings growth per share will become the core variable driving market performance. Goldman Sachs strategists Peter Oppenheimer, Sharon Bell, and others stated in a report titled “The Post-Modern Era: Embracing the Capex Boom” that higher capital costs are constraining the multiple expansion space, there is an increasing cross-sectional dispersion of market returns, strategies relying solely on beta exposure will face greater challenges, and the alpha value of active stock selection will significantly increase.
The report suggests that the AI revolution-driven surge in private capital expenditure, coupled with geopolitically driven government public investment increases, is forming a capital expenditure supercycle. According to Goldman Sachs data, capital expenditures for S&P 500 constituents grew by 38% year-on-year in the first quarter of 2026, while the pace of buybacks was only 1%, marking a reversal of the logic where post-financial crisis companies relied more on buybacks than capex. In terms of AI spending, market consensus expectations compiled by Goldman Sachs show that the combined capital expenditure of Amazon, Meta, Google, Microsoft, and Oracle is estimated to reach around $75.5 billion in 2026, an increase of about 80% from a year ago and approximately 84% growth compared to actual spending in 2025, projected to further rise to around $92 billion in 2027. Goldman Sachs points out that capex momentum is shifting from data centers to the energy, industrial, and infrastructure sectors.
Goldman Sachs stated that the growth of tech giants has increasingly relied on physical infrastructure such as data centers and power supply, leading to a “cascade effect” that spills over capital expenditure to traditional value industries such as industry, energy, and utilities. Additionally, geopolitical forces are driving an increase in defense spending, supporting demand for traditional defense equipment such as planes, tanks, ammunition, and ships. Goldman Sachs reiterated its preference for capex beneficiaries and recommended four thematic investment baskets: artificial intelligence, defense spending, power and electrification, and HALO (Heavy Asset-Light Organizations) stocks. Goldman Sachs believes that future index-level returns may tend to flatten, but relative returns across regions, industries, and styles will diverge, signaling that investors are entering a new era where active management and alpha generation are becoming more valuable.
