⚡ Goldman Sachs internal views on AI market diverge: One side warns profit growth has peaked, while the other points to $1.1 trillion in backlog orders validating returns on investment. On November 1, two senior Goldman Sachs strategists offered sharply contrasting views on the outlook for the AI market. Tony Pasquariello argued that the third-quarter earnings reports from tech giants revealed that S&P 500 profit growth may have already peaked, with market momentum weakening, making large bets inadvisable at this time. Meanwhile, London-based strategist Mark Wilson contended that the combined $1.1 trillion backlog in orders for Google Cloud and AWS clearly demonstrates that returns on AI investments are being realized, maintaining a bullish stance. Wilson cited data showing Google Cloud revenue increased 103% year-over-year, with backlog growing 256% to $561 billion; AWS revenue rose 39%, with backlog increasing 189% to $578 billion, resulting in a combined backlog of approximately $1.14 trillion. Wilson believes the strong growth performance of global cloud providers confirms robust AI demand and is addressing market skepticism about returns. However, Pasquariello argues that impressive cloud business growth masks weakness in other core operations; while tech giants continue to expand capital expenditures, they have failed to demonstrate corresponding expansion in profit growth. He noted that signs of peak profit growth are emerging in the S&P 500, and upward revisions to forward EPS estimates have noticeably slowed. The core market debate has now shifted from whether AI demand exists to how returns on investment will be realized. Despite its $561 billion cloud backlog, Alphabet posted a net free cash flow outflow of $910 million this quarter, below the market expectation of $3.5 billion net inflow. Another Goldman Sachs strategist, Rich Privorotsky, framed the issue as one of “value capture”: which companies along the AI value chain can truly generate profits, and at what cost of financing? Meanwhile, internal movements within U.S. equities have shown clear divergence: the S&P 500 index excluding AI stocks performed significantly stronger than tech stocks in October. Both strategists agree that market volatility remains unusually high, but they hold differing views on whether the AI rally can be sustained.