Key Takeaways
- According to Goldman Sachs analysis, Nvidia and Micron are projected to contribute approximately one-third of total S&P 500 earnings expansion during 2026.
- Companies benefiting from AI infrastructure investments are forecast to generate close to 50% of S&P 500 EPS growth through 2026 and 2027.
- Nvidia’s strength comes from surging AI accelerator adoption; Micron capitalizes on memory chip demand from expanding AI models and hyperscale facilities.
- Goldman warns that escalating depreciation expenses from aggressive hyperscaler capital deployment may constrain earnings momentum, especially by 2027.
- Analyst consensus suggests NVDA has 45.4% upside potential with a $306.46 target, whereas MU shows 21.6% projected downside risk.
Goldman Sachs has identified two semiconductor giants as pivotal drivers of S&P 500 profit expansion for 2026, presenting projections that demand attention.
The investment bank’s forecast, issued on May 27, estimates that Nvidia and Micron will collectively contribute approximately one-third of the entire S&P 500’s earnings growth this year.
This represents a remarkable concentration of earnings power within just two corporate entities.
Goldman’s comprehensive analysis indicates that companies positioned to benefit from AI infrastructure expansion will contribute nearly 50% of S&P 500 earnings per share growth throughout 2026 and 2027. This category encompasses semiconductor manufacturers alongside tech hardware companies, industrial firms, and utility providers capitalizing on data center expansion.
NVDA stock declined 1.14% during the trading session, whereas MU advanced 1.25%.
Nvidia’s central role in this narrative is clear-cut. Persistent demand for AI accelerators — the specialized GPUs essential for training and running AI models — continues unabated. The company has established itself as the primary supplier for organizations deploying AI infrastructure.
Micron’s strategic position receives less attention but carries equal significance. As artificial intelligence models expand in scale and data center operations intensify, high-bandwidth memory requirements escalate proportionally. This represents Micron’s core market opportunity.
Goldman’s analysis highlights how this influence extends beyond the semiconductor sector. Utility providers and industrial companies supporting data center construction are capturing earnings benefits as this infrastructure expansion ripples through the broader economy.
Potential Headwinds Identified by Goldman
The outlook isn’t without complications. Goldman explicitly cautioned that hyperscalers — major cloud computing platforms — are deploying massive capital into AI infrastructure, generating expenses that persist over time. Depreciation charges on these substantial investments will begin pressuring earnings, with particular impact expected by 2027.
This represents a legitimate concern. Today’s intensive capital expenditure creates future accounting burdens that could erode portions of the earnings growth Goldman anticipates.
Insider trading patterns at Nvidia merit consideration as well. Throughout the previous three months, company insiders divested $163.7 million in shares with zero reported purchases. While this doesn’t necessarily signal trouble independently, it provides relevant context for investors.
Analyst Sentiment Breakdown
Regarding analyst preferences between these stocks, the contrast is substantial.
NVDA holds a Wall Street consensus price target of $306.46, suggesting 45.4% appreciation potential from present levels. Micron’s analyst consensus target conversely indicates 21.6% potential downside.
Nvidia scores 96 out of 100 on its GF Score, achieving maximum 10/10 ratings in both profitability and growth categories. The stock trades at a 32.17x P/E multiple, reflecting the valuation premium investors have accepted given its earnings growth trajectory.
While Goldman Sachs’ AI infrastructure investment thesis encompasses numerous companies across multiple sectors, Nvidia and Micron represent the most direct semiconductor plays on this transformative trend.
