Competition for Capital

Goldman Sachs

Peter Oppenheimer

Research

12 Pages

Goldman Sachs examines how rising AI investment and government borrowing are intensifying competition for capital, lifting yields and pressuring equity valuations. Despite higher rates, earnings remain strong and broadening globally, while AI capex increasingly consumes hyperscaler cash flow and pushes financing into credit, equity, and convertible markets.

Key Takeaways

Capital demand rises: AI-related issuers account for 25% of US investment-grade gross supply this year; Goldman raised its 2026 issuance forecast to $2.3 trillion.
Hyperscalers spend heavily: AA-rated issuer capex grew 65% year-over-year in Q2, the tenth straight quarter above 35%, while AI borrowers drove 44% of convertible issuance.
Valuations reset: Global technology P/E fell below its 20-year median, while Industrials now trade near the 90th percentile of their 20-year valuation range.
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