Goldman Warns AI Capex Will Shave Mega-Cap ROE Seven Points; Jassy Flags Anthropic Flaws
AMZN•Goldman projects AI infrastructure spending will cut mega-cap ROE by seven percentage points next year after record 44%, with hyperscale capex reaching $770 billion in 2026, roughly 100% of operating cash flow. Amazon CEO Andy Jassy flagged security flaws in new Anthropic models before U.S. restrictions.
1. Record ROE and AI Spending Boom
In Q1 2026, S&P 500 return on equity reached a record 22%, with mega-cap technology companies collectively posting a 44% ROE. Over the past three years, the seven largest tech firms, including Amazon, boosted combined ROE by nine percentage points, driven by rising profit margins and stronger earnings expectations.
2. Depreciation and Financing Pressures
Hyperscale firms are ramping AI infrastructure investment, pushing depreciation and amortization from 7% of revenue in 2022 to an estimated 12% by 2027. Consensus forecasts $770 billion in capital expenditures for 2026, roughly equal to operating cash flow, forcing greater reliance on debt and equity financing.
3. Jassy Raises Security Flags on Anthropic Models
Amazon CEO Andy Jassy reportedly identified security vulnerabilities in two of Anthropic’s new AI models, leading to restricted access ahead of U.S. regulatory measures. This internal risk assessment highlights Amazon’s caution around third-party AI deployments on its cloud platform.
4. Implications for Amazon's Cloud Business
Rising AI capex and regulatory scrutiny may squeeze AWS profitability in the near term but could also drive demand for secure, compliant cloud services. If global AI competition intensifies, Amazon stands to capture greater market share by offering robust infrastructure and governance solutions.
