The S&P 500 hit a new record high yesterday, up 0.62% at 6,944.82. Futures are marginally down this morning, as might be expected from traders who want to sell up and lock in some of those gains. The STOXX Europe 600 also hit a new high yesterday and was flat in early trading this morning.
Much of the bullishness is coming as analysts realize that the massive amounts of capital expenditure (capex) on building out AI data centers isn’t likely to stop anytime soon.
The result of all that new spending will be that “we expect another year of solid gains for U.S. equities in 2026. We forecast an S&P 500 total return of 12% to a year-end level of 7,600,” Goldman Sachs analyst Ben Snider and his colleagues told clients in a note sent this morning.
However, the wrinkle for 2026 will be that AI capex growth will start to slow down, he said. In turn, the amount of profit needed to justify all that capex won’t show up, Snider et al argue, and that will cause traders to pick and choose winners and losers among the big tech firms of the S&P 500.
“The 10 largest stocks in the S&P 500 account for 41% of market cap and drove 53% of the S&P 500 2025 return. We expect AI spending will exceed consensus estimates this year but begin to decelerate in growth terms while corporate adoption increases, causing rotations among the largest U.S. tech stocks that create two-way risk for the aggregate index,” he told clients.
