Goldman Sachs projects S&P 500 earnings per share will grow 27% year over year in the third quarter, with AI infrastructure spending driving more than half of that growth. The bank sees a slowdown from Q2's pace, not a reversal, and has set a 12-month index target of 8,700.
Goldman Sachs expects S&P 500 companies to post earnings-per-share growth of 27% year over year for the third quarter, largely on the back of corporate spending on artificial intelligence. That would mark a slowdown from the adjusted 33% growth logged in the second quarter, but it would also be the third straight quarter above 25%.
What Goldman is projecting
The forecast comes from a report dated October 2, 2026, led by Goldman Sachs strategist Ben Snider. According to the research, three consecutive quarters of growth above 25% is unusual, and streaks like this have mostly appeared when the economy was bouncing back from a crisis.
Goldman projects AI infrastructure spending will account for more than half of the index's overall earnings growth. Information technology and energy together are expected to deliver nearly 80% of the S&P 500's EPS expansion, a sector mix the bank describes as lopsided.
A small group doing heavy lifting
Goldman expects the top ten contributors to generate 68% of total EPS growth. Within that group, chipmakers Nvidia and Micron are expected to account for more than one-third of the growth on their own.
Hyperscalers, the cloud providers renting out computing power at massive scale, are behind much of the spending. Their capital expenditures are forecast to rise 116% year over year in the third quarter of 2026. That is up from 87% growth in the second quarter. The research also notes AI-related spending has driven nearly half of the index's EPS growth so far in 2026.
The bank's bigger numbers
Goldman's broader outlook stays upbeat. The bank projects full-year 2026 S&P 500 earnings per share of $375, a 36% increase from 2025, and has set a 12-month target of 8,700 for the index. The median S&P 500 company is expected to show roughly 9% EPS growth.
The risks in the fine print
The research flags several pressure points. First, the tailwind from AI capital spending may diminish over time. Second, depreciation could weigh on reported profits later, since companies spread the cost of expensive equipment across future years as an accounting expense. Third, chipmakers' unusually fat margins on AI hardware could normalize.
Despite those risks, Goldman's base case is a slowdown rather than a downturn. The bank argues productivity gains from AI will gradually offset the fading boost from investment-led growth.
Source: Crypto Briefing
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