Goldman is basically telling everyone that if the AI checks stop coming, the market is toast

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Goldman: If the outlook on AI capex were to change dramatically, a reversion of long-term growth estimates back to early 2023 levels would imply 15-20% downside to the current valuation multiple of the S&P 500 according to GS Research macro valuation model.

An extreme scenario in which the hyperscalers cut capex back to 2022 levels would pose substantial downside risk to both the AI trade and the broad S&P 500. Hyperscaler capex totaled $158 billion in 2022, $275 billion below the expected level of capex among the group in 2026. If capex were to immediately revert back to 2022 levels, that “lost capex” would represent a reduction of roughly 30% to the consensus estimate of $1 trillion in 2026 S&P 500 sales growth.

As a result, revenue growth would decline from the current consensus estimate of 6% to roughly 4%. While the decline in near-term revenues would be modest, this extreme reduction in capex would likely be accompanied by a deterioration in the outlook for long-term AI-driven earnings growth, weighing on valuations as well.