Goldman Says Tech Bull Market Has Room to Run

Goldman Sachs Wealth Management's Matt Weir says gains concentrated in a handful of large technology stocks do not signal the end of the bull market. He expects hyperscaler capital-spending growth to slow from its extraordinary pace but remain well above overall economic growth, and says earnings will determine stocks' next direction.

Analysis

The key market variable is not whether hyperscaler capex keeps growing, but whether incremental spend converts into durable earnings faster than depreciation, power, and infrastructure costs accumulate. Elevated spending can support semiconductor and networking demand even as its growth rate slows; however, supplier stocks may react to the change in growth expectations before reported revenue rolls over. For hyperscalers, capex that fails to produce monetizable AI revenue risks crowding out buybacks and pressuring future margins.

A narrow index leadership is therefore a valuation and earnings-breadth risk, not by itself evidence that the bull market has ended. Over the next 1–3 months, earnings revisions and management commentary on returns from AI investment matter more than broad assurances about long-term demand. Over 6–18 months, the test is whether earnings growth spreads beyond the largest platforms; otherwise, index-level performance remains unusually exposed to a small group and capex beneficiaries remain vulnerable to order pauses.

The bullish view is plausible but incomplete: “well above economic growth” is not enough if capex growth slows faster than investors’ embedded expectations or returns disappoint. No valuation, earnings-revision, or capex-return data are supplied, so this supports a conditional relative-value setup rather than a broad directional long.

Key Decisions for Investors

• Watch, rather than chase, the broad-market bullish thesis. Track hyperscaler capex guidance alongside evidence of AI monetization and earnings revisions; capex alone is not a sufficient buy signal for either platforms or suppliers.
• Conditional relative-value idea: consider a small long RSP / short SPY position if equal-weight performance and earnings-revision breadth improve over the next 1–3 months. The thesis is broader participation; it is falsified if leadership narrows further or equal-weight earnings revisions deteriorate.
• Treat semiconductor and networking exposure as more sensitive to the *rate of change* in spending expectations than to the absolute level of capex. Reassess on hyperscaler guidance, supplier order commentary, and any signs of project delays; avoid extrapolating elevated spend into uninterrupted supplier growth.
• No outright index or options trade is warranted from this commentary alone. Missing checks include current relative valuation, earnings-revision breadth, capex-to-revenue conversion, and market pricing of future spending deceleration.