Goldman Sachs forecast a 7 percentage point average decline in Big Tech return on equity over the next year, warning that AI infrastructure spending is outpacing revenue generation globally.1
The June 12 report targets Microsoft, Alphabet, Meta, Amazon, and Apple — the five largest AI infrastructure investors and the dominant weights in indices tracked by pension funds, sovereign wealth funds, and retail investors across Europe, Asia, and the Americas.1
AI hardware and infrastructure investment cycles typically lag revenue generation by 18 to 24 months.1 That structural gap compresses margins before monetization begins. The scale of current spending — larger than any prior technology buildout — extends that drag.
Return on equity measures how efficiently a company converts shareholder equity into profit. A 7-point compression across five of the most profitable businesses in global equity markets would represent a material deterioration in capital efficiency — one that current valuations may not yet reflect.
The S&P 500 returned 9% year-to-date on earnings growth.1 International investors who have rotated into US tech equities on that momentum face direct exposure if Goldman's forecast holds.
The counterargument is timing. AI proponents argue that inference services, enterprise APIs, and cloud AI tools will monetize faster than cloud computing did in the 2010s — a cycle that took most of the decade to turn margin-accretive. China's competing AI infrastructure push adds pressure: US firms cannot slow capex without ceding ground internationally.
Confirming the Goldman thesis requires tracking quarterly ROE across all five companies over four consecutive quarters. A verified average decline of 5 to 9 percentage points would validate the projection.1
The implications extend far beyond Wall Street. ROE compression at this scale ripples through global index returns, analyst estimates in London, Tokyo, and Frankfurt, and the capital allocation decisions of institutions managing trillions in assets internationally. With AI infrastructure spending showing no sign of slowing, the revenue side of that equation is the critical variable for global markets over the next 12 months.
Sources:
1 Goldman Sachs Research, June 12, 2026
