Goldman Sachs interprets the "Postmodern" investment cycle: AI and geopolitics are driving a supercycle of capital expenditure

BlockBeats News, June 17 — Goldman Sachs believes that the world is transitioning from a "modern" supercycle characterized by low inflation, low interest rates, and globalization to a "post-modern" cycle with higher macro volatility, higher real interest rates, increased government intervention, and more regionalization. In this environment, the era of returns driven by valuation expansion is coming to an end, and earnings growth per share will become the core variable influencing market performance. Goldman Sachs strategists Peter Oppenheimer, Sharon Bell, and others stated in a report titled "Post-Modern Cycle: Navigating Capital Expenditure Booms" that higher capital costs are suppressing valuation multiple expansion, cross-sectional dispersion of market returns is increasing, and strategies relying solely on beta exposure will face greater challenges. The alpha value of active stock selection will significantly increase.

The report suggests that the wave of private capital expenditure driven by the AI revolution, combined with increased government public investment fueled by geopolitical factors, is forming a supercycle of capital spending. Goldman Sachs data shows that in the first quarter of 2026, S&P 500 component companies' capital expenditures are expected to grow by 38% year-over-year, while buybacks are only up 1%, reversing the post-financial crisis trend where companies relied more on buybacks than capital spending. Regarding AI spending, Goldman Sachs’s consensus estimates indicate that Amazon, Meta, Google, Microsoft, and Oracle will collectively spend about $75.5 billion on capital expenditures in 2026, roughly 80% higher than a year earlier, and about 84% higher than actual spending in 2025, with further growth expected to reach approximately $92 billion in 2027. Goldman Sachs points out that the momentum of capital expenditure is spreading from data centers to energy, industrial, and infrastructure sectors.

Goldman Sachs states that the growth of tech giants is increasingly dependent on physical infrastructure such as data centers and power supplies, which will create "cascading effects" that spill over into traditional value sectors like industrials, energy, and utilities. Meanwhile, geopolitical factors are driving increased defense spending, supporting demand for traditional military equipment such as aircraft, tanks, munitions, and ships. Goldman Sachs reaffirms its preference for stocks benefiting from capital expenditure and recommends four thematic investment baskets: artificial intelligence, defense spending, power and electrification, and HALO (high-asset stocks). Goldman Sachs believes that overall index-level returns may become more subdued in the future, but relative returns across regions, industries, and styles will diverge more widely, ushering investors into a new era where active management and alpha generation are more valuable.