Goldman Sachs Delta-One desk head Rich Privorotsky warned global capital is
being heavily absorbed by government financing and AI infrastructure investment.
He expects annual AI capex could exceed $1 trillion and become increasingly
debt-financed. With major economies still running large fiscal deficits, public
spending and AI are drawing on the same capital pool, a squeeze already
transmitting to the non-AI economy. Governments typically lack incentives to cut
spending, so higher real rates may force more adjustment onto the private
sector. Privorotsky cites large-cap re-rating as evidence—stock price action has
labeled what EPS revisions alone would explain. On demand, he says fiscal
stimulus was largely front-loaded, tariff-driven inventory rebuilds are mostly
complete and some demand was pulled forward. As more funds flow to data centers
and AI infrastructure, financing, investment and valuations in non-AI sectors
could remain under pressure and market dispersion widen.
