Business · Fortune Technology
Top Wall Street analysts say the AI opportunity might be just starting
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The crash that was widely predicted last summer hasn’t arrived yet.
Key facts
- Earnings, crucially, never collapsed: Analysts project info tech to grow earnings per share by 44% in Q1 2026, accounting for 87% of S&P 500 index earnings growth
- Goldman estimated that AI infrastructure investment will account for roughly 40% of all S&P 500 earnings growth this year
- Wilson’s data corroborated this as S&P 500 forward 12-month EPS growth is accelerating to multiyear highs
- The Magnificent Seven, he writes, now trade at roughly 24 times forward earnings—nearly the same multiple as consumer staples at 22 times—yet carry more than three times the forward earnings growth
Summary
“You know, that’s a interesting way to put it,” said David Royal, chief investment officer at Thrivent, in a recent interview, when asked if the bubble had already burst and nobody noticed. Royal centered his analysis on Nvidia, the giant that became the face of the AI investment supercycle and yet has seen its stock price stagnate for roughly three quarters even as its earnings continued to grow at a blistering pace. New research from Goldman Sachs’ and Morgan Stanley’s top equity analysts agrees with the emerging pattern in markets: a slow climb-down after the bubble warnings months ago. Goldman Sachs’ Peter Oppenheimer put it slightly differently from Royal, in a note published Tuesday morning: The technology sector has endured one of its worst periods of relative underperformance compared with the rest of the global market since the early 1970s. The selloff wasn’t irrational panic.