Goldman Sachs: The AI investment wave will continue to dominate the S&P 500’s second-quarter earnings season, but investors are starting to focus on return on investment.

Goldman Sachs strategist Ben Snider expects the AI investment wave will continue to dominate the S&P 500’s second-quarter (Q2) earnings season. He forecasts that S&P 500 constituents will post around 22% year-over-year (YoY) earnings growth in Q2, with Nvidia and Micron likely contributing roughly 40% of the total earnings growth, and AI infrastructure-related stocks accounting for nearly 60%. This means that despite recent rotation and divergence among AI-linked stocks, AI remains one of the most critical growth drivers for U.S. equities from an earnings perspective. Goldman’s assessment also suggests the current bull market is not entirely dependent on valuation expansion: the S&P 500 has climbed nearly 20% over the past year, driven primarily by earnings growth rather than further expansion of price-to-earnings (P/E) multiples. However, the focus of earnings season is shifting. Investors have broadly accepted that hyperscale cloud giants including Microsoft, Amazon, Alphabet, and Meta will continue to make massive capital expenditures. The real question now is whether these outlays will generate sufficient revenue, margins, and cash flow. In other words, the market wants to see not just AI server orders, but AI return on investment.