Goldman Sachs Strategist Says AI Faces a Profit Bubble, Not a Valuation Bubble

Goldman Sachs chief global equity strategist Peter Oppenheimer said in early August that technology stocks may face a profit problem rather than a valuation problem. According to Sina Finance, a new report released on Thursday said the latest evidence reinforces that view. The report, titled "Capital Competition," links the risk of an AI-driven profit bubble to a specific transmission mechanism, a historical stress test, and a recent trigger that Oppenheimer said has already appeared in this month's bond-market volatility. He said the case is now supported by capital expenditure and cash flow data, record credit issuance, and a lowered near-term outlook for equities. Oppenheimer said technology stocks do not appear to have a valuation bubble, but may be forming a profit bubble. He said AI infrastructure spending and government borrowing are competing for the same pool of capital, while higher energy prices are adding inflation pressure and pushing up policy rates. He cited data showing that capital expenditure at AA-rated technology issuers rose 65% year over year in the second quarter, while U.S. convertible bond issuance reached $135 billion so far this year. Goldman Sachs' credit team also raised its forecast for full-year U.S. investment-grade bond issuance by $200 billion to a record $2.3 trillion.