Goldman Sachs mid-year update: the ten major themes for 2026 in U.S. internet and interactive entertainment still center on the AI investment cycle, agentic commerce and capex returns

Overview

This Goldman Sachs report on Americas technology, internet and interactive entertainment is a mid-year update on the ten major themes for 2026. Building on the year-end 2025 outlook, it revisits the core debates for the next 12-18 months across the coverage universe: the AI investment cycle, global consumer health, and the potential for AI to disrupt search, advertising, shopping, content and platform business models. The report argues that although capital expenditure, financing, depreciation and consumer weakness may weigh on short-term sentiment, long-term themes such as cloud computing, the AI application layer, agentic commerce, local commerce, interactive entertainment, health and spatial computing are still in a phase of structural expansion.

Core views

The core views are: first, AI infrastructure is still in the buildout phase, and capex at hyperscale cloud and platform companies such as AMZN, GOOGL and META remains elevated, but signs in cloud revenue, advertising revenue and backlog support an improvement in investment returns. Second, AI is moving from a passive Q&A tool to agentic workflows that can execute multi-step tasks, which may reshape internal enterprise processes, consumer search paths and commercial conversion funnels. Third, the boundaries between advertising and e-commerce continue to blur, and agentic commerce, social commerce, the creator economy and retail media networks may become new traffic and monetization interfaces. Fourth, local commerce, mobility networks, online travel experiences, interactive entertainment, health tracking and spatial computing represent medium- to long-term growth opportunities for internet platforms. Fifth, the industry's biggest medium-term tension is the balance between growth investment, margins, free cash flow and capital returns.

Analysis framework

The report uses a top-down industry-theme framework combined with bottom-up stock-level risk/reward screening. At the theme level, Goldman Sachs analyzes AI infrastructure, AI models and platforms, the AI application layer, the convergence of advertising and e-commerce, local commerce, autonomous driving, travel experiences, content distribution, health and wellness consumption, spatial computing and investment intensity. At the stock level, the report combines theme exposure, revenue growth potential, margin trajectory, valuation positioning, recent share-price performance and investor debate to identify names such as DASH, UBER, NFLX, META, AMZN, SPOT and GOOGL as relatively positive risk/reward opportunities.

Methodology notes

• Industry theme research2026 Ten Industry Themes Framework

  Use ten structural themes to cover the main growth opportunities and investment debates in U.S. internet and interactive entertainment.

  The framework organizes industry judgments around ten directions: the AI investment cycle, agentic workflows, agentic commerce, local commerce, mobility networks, travel experiences, interactive entertainment, health and wellness consumption, spatial computing and balancing growth investment.

• Capital return analysisAI Capex and ROIC Monitoring

  Observe AI investment returns through capex, cloud revenue, advertising revenue, backlog, depreciation and free cash flow.

  The report emphasizes that current capex will affect revenue and returns with a lag of 2-3 years or more; investors need to keep tracking demand realization, capacity utilization, depreciation pressure and the ability to offset margin headwinds.

• Asset screeningRisk/Reward Matrix

  Assess recent share performance, growth, margins and valuation across large-cap, mid-cap and small-cap internet coverage.

  The report measures risk/reward using recent six-month stock performance, 3-5 year revenue growth, margin trends and historical valuation positioning, and highlights several names with a favorable skew.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AMZN

  A core exposure name for AI cloud computing, advertising, media consumption, local commerce, automation and long-term investment themes.

  Strengths

  AWS benefits from AI training and inference demand, the advertising business can benefit from AI ad tools, and the retail and media ecosystem provides multiple growth sources.

  Weaknesses

  Capex and long-term project spending may pressure free cash flow and margin visibility.

  Comparison

  Compared with single-application companies, AMZN has broader theme exposure, but capital intensity is also higher.

  Risks

  AI capacity overbuild, cloud demand below expectations, weaker consumer spending and a longer investment payback period.

• GOOGL

  An important exposure name for AI infrastructure, Google Cloud, search evolution, advertising AI and spatial computing themes.

  Strengths

  It has user scale, product innovation, technical infrastructure and cost leverage, and the report believes it is best positioned to benefit from the multi-year evolution of its core Search product.

  Weaknesses

  The search entry point may face challenges from AI agents and new interaction modes, while capex and financing discussions are increasing investor focus.

  Comparison

  It is better positioned than most covered companies across AI consumer and enterprise use cases, infrastructure, custom silicon and the transformation of core applications.

  Risks

  Unsuccessful monetization migration in search, insufficient AI capital returns, potential dilution and regulatory pressure.

• META

  A core name for AI advertising, social commerce, consumer AI, spatial computing and Family of Apps growth.

  Strengths

  The core social, media, advertising and communications businesses still have strong forward growth, and AI ad products can help reaccelerate advertising revenue.

  Weaknesses

  The market still worries about the scale of its compute investment and the visibility of long-term returns.

  Comparison

  Compared with traditional ad platforms, META has a stronger closed-loop scenario in social commerce, the creator ecosystem and AI business assistants.

  Risks

  Capex exceeding expectations, slow AI product monetization, advertising demand volatility and uncertainty around the return on spatial computing investment.

• DASH

  A positive risk/reward name for the local commerce theme.

  Strengths

  Management highlights higher user engagement, stronger platform economics and upside to revenue from changes in consumer behavior.

  Weaknesses

  The business still depends on local delivery penetration, higher frequency and category expansion.

  Comparison

  Compared with traditional e-commerce, DASH benefits more directly from local on-demand demand and multi-category delivery.

  Risks

  Slower discretionary spending, intensifying competition, delivery cost pressure and deteriorating unit economics.

• UBER

  A core name for global mobility networks, delivery, local commerce and mixed-network autonomous driving themes.

  Strengths

  The multi-product platform and Uber One membership system help improve platform utility and user stickiness in GDP-concentrated regions.

  Weaknesses

  The development of autonomous driving could change the supply structure and profit distribution of the mobility network.

  Comparison

  Compared with LYFT, UBER has the network advantage of being more global and having more product lines.

  Risks

  Competition among autonomous-driving platforms, regulation, driver supply, consumer demand and delivery margin volatility.

• NFLX

  A key name for interactive entertainment, streaming, advertising and content distribution evolution themes.

  Strengths

  Long-term compound revenue growth, margin expansion and capital return capability form the core investment case.

  Weaknesses

  There are still debates around user engagement, ad business scalability and potential M&A capital allocation.

  Comparison

  Compared with gaming and social content platforms, NFLX depends more on premium content, pricing power and ad business expansion.

  Risks

  Rising content costs, slowing user growth, insufficient ad monetization and M&A execution risk.

• SPOT

  A beneficiary of the audio platform, AI-generated content, creator economy and interactive entertainment themes.

  Strengths

  The investor day showcased platform and product innovation, industry partnerships and a more favorable forward margin path.

  Weaknesses

  It needs to balance content investment, product innovation and margin improvement.

  Comparison

  Based on its content distribution scale, the report believes SPOT may be a net beneficiary of AI-generated content.

  Risks

  Music royalty costs, slower user growth, AI content quality issues and platform governance risk.

Key data

• Incremental capex expectations for AMZN, GOOGL and METAAbout $378 billionIn Visible Alpha consensus estimates, the combined 2026 and 2027 capex estimates for the three companies have risen by about $378 billion since the start of the year.
• Increase in 2026 capex expectationsAbout 39%Consensus FY2026 capex expectations for AMZN, GOOGL and META have been raised by an average of about 39%.
• Increase in 2027 capex expectationsAbout 56%Consensus FY2027 capex expectations for AMZN, GOOGL and META have been raised by an average of about 56%.
• Expected cloud revenue growthRoughly above 40%The report expects combined cloud revenue growth for AMZN, MSFT and GOOGL to accelerate to roughly above 40% in Q2 and Q3 2026.
• Cloud demand backlog growthAbout 4,900 bpsThe report says backlog growth reported by major cloud providers accelerated by about 4,900 basis points in the first quarter.
• U.S. enterprise AI adoption rateAbout 20%, expected to be about 23% over the next 6 monthsCiting the GS GIR macro team, enterprise AI adoption is still in the early stage.
• U.S. social commerce revenue forecast2024-2029E CAGR of about 11%, reaching about $151 billion in 2029The report cites Statista estimates and treats social commerce as an important long-term theme at the intersection of digital advertising and e-commerce.
• Potential increase in compute demand24xThe report says rising adoption of AI agents could increase compute demand by 24x versus current levels.

Impact & implications

For investors, the report implies that the valuation anchor for the internet and interactive entertainment sector is shifting from pure revenue growth to AI investment returns, depreciation absorption capacity, financing dilution risk and evidence of application-layer monetization. In the near term, higher capex, potential equity financing and weak consumer demand may pressure multiples. Over the medium to long term, if cloud demand, AI advertising tools, agentic commerce and platform efficiency continue to materialize, leading platforms may still replicate double-digit revenue growth, margin improvement and strong free cash flow. On allocation, the report prefers companies that can simultaneously own distribution, data, infrastructure and a multi-product ecosystem.

Risks

• AI infrastructure could be overbuilt, and future demand and ROIC may not match current capex.
• A higher share of assets with shorter useful lives such as GPUs could keep depreciation expense pressuring GAAP earnings.
• Large platforms may raise AI investment funds through equity or debt financing, creating dilution or valuation pressure.
• Global consumer data is mixed and in some cases weakening, and inflation pressure could affect advertising, mobility, travel and discretionary spending.
• AI agents may reshape the entry points for search, shopping, advertising and content distribution, weakening some platforms' end-market value assumptions.
• Macro and consumer uncertainty since the conflict in the Middle East could affect brand advertising and discretionary spending budgets.
• Long-term themes such as autonomous driving, social commerce, spatial computing and health hardware still face uncertainty around adoption speed, regulation and monetization.

What to watch

• Whether capex intensity at AMZN, GOOGL and META shows signs of easing in 2027 and beyond.
• Whether cloud revenue, backlog and capacity ramp-up can continue to support AI investment returns.
• Actual monetization evidence for AI ad tools, agentic commerce and AI shopping assistants.
• Whether large platforms continue to use equity or debt financing and how the market reacts to dilution risk.
• Changes in depreciation expense, free cash flow and operating margin during 2026-2028.
• Consumer spending, brand ad budgets and demand resilience at discretionary-consumption platforms.
• The impact on UBER and LYFT's mixed networks as autonomous driving rolls out in more cities.
• The pace of spatial-computing hardware price declines, application-ecosystem expansion and AI agents becoming central to the user experience.