US Weekly Kickstart: The Impact Of The Ai Capex Boom On S&P 500 Return On Equity

This report examines the impact of the AI capex boom on S&P 500 Return on Equity (ROE), noting that while profitability has reached record levels, heavy infrastructure spending by hyperscalers threatens future margins. Analysts expect ROE to face headwinds in the tech sector, potentially pressuring index valuations that remain near historical highs.

Key Takeaways

• 1.S&P 500 ROE is at a record 22%, but the AI capex boom creates future headwinds for mega-cap tech profitability due to rising depreciation and asset intensity.
• 2.Hyperscaler capex spend reached $770 billion in 2026, forcing increased leverage and equity issuance to fund investment, which pressures long-term ROE.

Table of Contents

• The outlook for S&P 500 ROE
• Record profitability has been one of the factors supporting high S&P 500 valuations.
• Variation in profitability also helps explain the variation in valuations across equity indices.
• Capital raising to fund the AI build-out signals additional headwinds to ROE.
• S&P 500 earnings and return forecasts
• Biggest stock movers this week
• YTD absolute and risk-adjusted returns
• Sentiment and flows
• Economic growth
• Interest rates and financial conditions
• Market breadth and concentration
• Correlation and volatility
• IPO Barometer and mutual fund performance
• Earnings growth
• Valuations
• Sector returns, earnings, and valuations
• Thematic baskets
• Factors
• Goldman Sachs global macro research cross-asset forecasts
• Disclosure Appendix