Goldman Sachs says AI supply and demand won't balance until 2028.
That means Big Tech capex will stay high for years.
Memory and chip prices are rising, and supply chains remain constrained.
What happened
Goldman Sachs Research says AI supply and demand won't balance until the first half of 2028. This means more capital expenditures, more revenue growth, and continued supply chain constraints.
Why it matters
Big Tech capex numbers are expected to stay high for years. Alphabet raised its 2026 full-year guidance to $195 billion to $205 billion, and Tesla plans $25 billion for 2026, roughly three times its historical spending.
What to watch
SpaceX's Q2 capex was $18.4 billion, well above the ~$6 billion analysts estimated. JPMorgan warns SpaceX could spend $200 billion on AI in each of the next two years.
Ask the AI about this article →
The article highlights that the second-quarter earnings season gave a taste of what's to come. Alphabet's Q2 capex came in at $44.9 billion, slightly above forecasts. Tesla's stock was hammered this past earnings season on spending concerns. The key takeaway is that investors should expect these eye-popping numbers for several years. Goldman Sachs' Eric Sheridan notes that memory and chip prices are higher than six or twelve months ago, and input costs are all rising. There's also a rush to acquire land and build data center shells ahead of component availability. The 'gazillion-dollar question' is whether this aggressive spending is already priced into Big Tech stock prices. Many companies, like Tesla, saw their shares fall this earnings season, suggesting investor skepticism. However, the article suggests this is just the beginning of a long cycle of heavy investment in AI infrastructure.
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