Goldman: The Most Capital-Hungry Investment Cycle In Human History Has Arrived... And The Fed Is Just A Passenger

Markets are navigating a generational shift from decades of global savings glut to an unprecedented capital-hungry regime, where AI’s enormous infrastructure build-out collides with re-industrialization, defense rearmament, power-sector reconstruction, supply-chain reorientation, and soaring sovereign funding needs for interest expense and welfare, driving the cost of capital structurally higher and rewriting the investing paradigm.

US 30-year yields have broken out to pre-GFC levels amid Fed uncertainty under the new chair, while equity indices mask historic dispersion and a momentum-factor collapse that has forced widespread de-risking; yet fundamentals remain robust with persistent 2026-27 EPS upgrades, hyperscalers raising already mind-bending CapEx plans on the back of accelerating AI/cloud traction (AWS potentially on a path to $1 trillion), and memory markets flashing supply risks - leaving a transition period of private-sector AI abundance versus capital-constrained states, with August likely quieter as midterm election risks loom.