Goldman Sachs is telling stock market investors that the old winning formula is breaking.
For years, investors have been following the same playbook: falling rates, capital-light technology, higher valuations, and a narrow group of stocks doing most of the heavy lifting.
The call lands with the S&P 500 trading near 7,550, according to Reuters, up from roughly 5,970 a year ago and up about 10% year to date.
Now the bank argues in a note shared with me that the cycle has turned.
AI spending, defense budgets, power demand, supply-chain rebuilding, and higher real rates are pushing markets into a capex-heavy era in which earnings growth matters much more than multiple expansion.
Wall Street spent years rewarding businesses that avoided heavy spending, but Goldman now believes the next winners may be those tied directly to it.
That also means that the stock market leadership shifts away from the post-2009 growth trade and toward semiconductors, infrastructure, power, defense, industrials, and real assets.
What Goldman Sachs said about the stock market’s next winners
Investors were used to working with a market playbook built around falling rates, low inflation, and capital-light growth.
In that regime, Goldman Sachs says valuation expansion became one of the biggest drivers of returns, and businesses that could grow without tremendous investment, especially in technology and software, commanded the premium.
However, Goldman says that the setup is changing.
The bank argues that the post-pandemic cycle is moving toward higher real rates, more state intervention, regionalized supply chains, and a capex supercycle driven by AI, energy security, defense spending, and infrastructure demand.
Additionally, Goldman says a higher cost of capital caps stock market valuations, making earnings growth much more important and widening the gap between stronger and weaker companies.
The shift also broadens the opportunity set.
Instead of a market led by long-duration growth stocks, Goldman sees more room for capex beneficiaries, semiconductors, power, defense, industrials, real assets, and other businesses tied to physical investment.
More AI:
The key numbers behind Goldman’s capex boom call
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Goldman’s capex call starts with a split: S&P 500 companies posted 38% year-over-year capex growth so far in Q1 2026, while buybacks rose just 1%, suggesting cash is moving from financial engineering toward expansion.
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AI remains the biggest driver, with Goldman expecting 2026 capex for the top 5 hyperscalers to have jumped about $80 billion to roughly $755 billion, nearly 80% higher than a year ago.
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The trade is working, where Goldman says its broad universe of capex beneficiaries is up about 25% year-to-date.
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Earnings also support the call, where consensus earnings for capex-linked companies are up roughly 25% year over year, reinforcing Goldman’s view that EPS growth may drive the next winners.
