The bull and the bears both have it wrong when it comes to the impact of AI capex spending, Goldman Sachs says.
Second-quarter earnings season is winding down, and it’s clear that Big Tech leaders have no plans to slow their AI investments. For the bulls, this means the positive impact on the economy will continue, with AI capex a large contributor to GDP. For the bears, it means AI will continue to suck up all the air in the room, crowding out other investment themes.
Yet, Goldman argues that both camps are wrong in their thinking.
“While media reports and market commentary often claim that AI is making a very large contribution to US GDP growth but also crowding out a great deal of other activity, our analysis in prior work and above suggests that both claims are exaggerated,” wrote US economist Jessica Rindels on Tuesday.
Goldman analysts have expressed bullish views this year on AI as investment, but when it comes to its macro impact, Rindels’ team maintains that while it’s certainly a powerful force, the capex boom isn’t as colossal as it appears on paper.
The economist highlighted the key distinction between what is visible in GDP statistics versus the actual economic impact of AI investment. Her team predicts that AI spending will only add a modest amount to measured GDP since many companies are buying imported AI equipment, while economic data doesn’t fully capture other AI-related activity.
“We estimate that accounting for the indirect effects of AI—roughly $50bn of incremental crowding-out in 2026 from the three channels above, positive stock market wealth effects on consumer spending, and the hit to real income and consumer spending from higher electricity and other prices—would shave about 0.1pp off of the impact on 2026 GDP growth,” she said.
While AI investment might not be contributing as much to the overall GDP growth as some headlines suggest, it also means that it’s not taking up as much space in the overall market as some bears say.
Rindels’ team examined the potential “crowding out” effect of AI, which could make it more difficult and expensive for other businesses to continue investing. She noted that although there’s some evidence of AI taking up much of the bandwidth in areas like technology, construction, and borrowing, other areas of the marke and the economy aren’t as fixated on AI.
“Crowding-out effects from AI spending appear moderate so far because so much of it has consisted of purchases by hyperscalers that had plenty of extra cash flow, because companies have replaced spending on other intermediate business services with spending on AI services,” Rindels noted.