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

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 lagged 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 centres and AI infrastructure, financing, investment and valuations in non-AI sectors could remain under pressure and market dispersion widen.