Goldman Raises Software EPS Estimates 5% and Sees 22% Higher Hyperscaler Capex
Goldman Sachs strategists led by Ben Snider lifted two-year forward software EPS estimates 5% over three months and now forecast 2026 hyperscaler capex 22% above prior projections. They warn US consumers absorb 96% of tariffs and a S&P 500 CAPE of 40 could curb trading revenue.
1. Software EPS Estimate Revisions
Goldman’s research team, led by Ben Snider, has lifted two-year forward EPS estimates for software companies by 5% over the last quarter, driven by double-digit Q4 results and upward guidance into 2026. Analysts pushed projections higher despite market concerns about AI-driven disruption, reflecting stronger-than-expected earnings performance in at-risk sectors.
2. Hyperscaler Capex Forecast Increase
The firm now sees capital expenditure by hyperscalers in 2026 running 22% above initial estimates at the start of the earnings season, a pace surpassing the late-1990s internet infrastructure boom. This upgrade underscores sustained investment intensity behind AI frameworks and cloud platforms.
3. Tariff Burden and Market Valuation Risks
Separately, the note highlights that US consumers absorbed 96% of tariff costs, which may constrain spending growth, while the S&P 500’s CAPE ratio of 40 signals elevated market valuations. These headwinds could weigh on Goldman’s trading volumes and revenue from market-facing businesses in coming quarters.