AI Demand, Digital Consumer Resilience, and Returns on Investment Will Drive the Next Phase for the U.S. Internet Sector

Overview

Following the conclusion of the second-quarter 2026 earnings season, this report systematically reviews operating performance across U.S. Internet subsectors and identifies key topics for management discussions at Goldman Sachs' Communacopia + Technology Conference in San Francisco from September 8 to 11. Its central view is that demand for AI infrastructure, resilient digital consumption, and improving platform efficiency continue to support industry growth, but market attention is shifting from pure revenue growth toward whether AI investments can translate into sustainable revenue, returns on capital, and margins.

Core views

The report first summarizes the sector's main themes into three interconnected questions. First, how will the growth rate of AI spending, returns on capital in 2027 and beyond, model competition, token pricing, and real-world utility evolve? Second, can end markets such as e-commerce, mobility, delivery, and online travel continue to demonstrate digital consumer resilience, and is the digital advertising market used to acquire customers for these industries healthy? Third, as management teams set operating priorities for 2027, how will they balance revenue growth, increases in operating expenses and capital expenditures, and potential margin improvement? AI infrastructure remains the strongest structural growth theme. The report believes there is a clear gap between available computing supply and demand for AI services, with this imbalance expected to persist through 2028. Factors supporting further increases in capital expenditures include expectations that cloud computing and AI revenue growth forecasts are entering an upward revision cycle, stable or strong incremental operating margins at hyperscale cloud providers, and continued firm pricing per gigawatt. Meanwhile, the model market is evolving toward stronger capabilities, better cost-performance, and a more diversified participant base. Goldman Sachs believes this will accelerate AI adoption and enhance its real-world utility for enterprises and consumers. Second-quarter cloud computing data further supports this view. Google Cloud revenue grew 81% year over year, with backlog rising to approximately $514 billion; AWS revenue grew 37% year over year, with backlog increasing 154% year over year. The two hyperscale cloud providers have a combined backlog exceeding approximately $1 trillion. Despite depreciation pressure from capital expenditures, AWS achieved a record operating margin of approximately 39%. Both companies expect to continue investing substantial capital in 2026 and 2027, but shortages of power and data center capacity continue to constrain incremental service capacity. AWS stated that demand exceeds available capacity, with supply constraints persisting through 2026 and potentially into 2027, while customers have already begun planning and committing workloads for 2028. Google Cloud highlighted growth in Gemini, AI infrastructure, enterprise AI deployments, and TPU adoption. SpaceX also stated that its computing deployment plans are accelerating, demand continues to exceed supply, and it has greater confidence in the commercialization opportunities for terrestrial and, over the longer term, orbital computing. The resulting central debate is whether demand can remain strong after capacity expansion, how custom chips will alter economics, and whether high capital expenditures will ultimately generate sufficient returns. The operating environment for digital advertising has generally improved, primarily driven by AI and machine-learning automation. Large platforms are using AI advertising tools to improve targeting, creative generation, conversion rates, and advertiser returns on investment while continuing to capture incremental share. Alphabet and Meta delivered broadly strong performance, while Pinterest, Reddit, and Unity also maintained momentum, reflecting advertisers' continued allocation of budgets toward platforms with measurable performance and clear user intent. Advertising demand from major verticals such as retail, financial services, and technology remains broadly healthy, while short-form video, AI-assisted discovery, creator content, and personalized recommendations also support user engagement. However, investor expectations were already elevated entering earnings season, and some results still fell short. The focus going forward is whether advertising budgets can remain durable, how AI will reshape search and consumer discovery, and when returns on incremental investment will materialize. The report believes AI has evolved from a pure productivity tool into a core driver of product innovation and revenue growth. Meta highlighted adoption of Advantage+ and other AI advertising solutions, while Alphabet identified monetization opportunities in AI Overviews, AI Mode, Gemini, and AI search experiences. Both companies are therefore continuing to increase investments in infrastructure, computing capacity, talent, and model development. The market recognizes the strategic significance of these investments but remains concerned about the timing, scale, and durability of returns, the depreciation expense resulting from greater capital intensity, and whether current AI monetization is sufficient to cover the investment. E-commerce companies generally delivered positive second-quarter results, indicating that consumer demand remains resilient despite an uneven macroeconomic environment. Common industry themes include the continued importance of scale advantages, platforms increasing user frequency through personalization and improved product discovery, and advertising, fulfillment, and software services becoming more important revenue sources. Amazon benefits from its overall ecosystem; Wayfair reported accelerating market share gains, improved customer acquisition, and strong momentum in specialty and luxury brands such as Perigold; Etsy highlighted improving buyer trends, personalization, and product innovation; StubHub delivered a strong quarter through share gains in the secondary ticketing market while expanding margins and generating free cash flow; Groupon continued its AI-native transformation and improved user engagement, although revenue remains in recovery; and Pattern aims to deepen brand relationships through value-added services, market expansion, and technology solutions. Investors will next focus on whether growth can persist, whether improvements in customer acquisition and engagement are durable, and how AI and agentic commerce will reshape traffic acquisition, conversion rates, and platform economics. Overall signals from digital consumers remain positive. E-commerce, online travel, and mobility and delivery companies generally reported revenue above expectations, although discretionary consumer companies outside the report's coverage and some macroeconomic data were more mixed. The consumer outlook could still weaken if input costs remain elevated and spending divergence across income groups worsens. Consistent with this, preliminary channel checks and industry discussions following earnings season indicate a relatively stable digital advertising pricing environment, although the report continues to call for monitoring consumer health and customer acquisition markets. Online travel is returning to a more normalized growth pattern. Second-quarter results and forward-looking commentary were generally better than the cautious expectations formed before earnings season due to geopolitical and macroeconomic uncertainty. Global travel demand remains stable, booking trends improved in June, and summer demand is generally healthy; however, high-end travel remains strong, while lower-income consumers are more cautious regarding travel timing, booking windows, and spending levels. Major events such as the World Cup and experiential travel could help platforms expand use cases beyond traditional accommodation and transportation bookings. AI is beginning to be used for travel discovery, planning, customer service, and internal processes, but bookings directly originating from AI interfaces remain relatively insignificant. The widely discussed normalized growth rate is approximately MSD-HSD% year over year, while investors are also monitoring share across regions and accommodation types, the marketing intensity required to sustain growth, operating leverage from product and geographic expansion, and shareholder returns supported by free cash flow. Goldman Sachs believes large platforms with broad supply, strong brands, loyalty programs, and deep partner relationships are more likely to participate in AI workflows than be displaced by them. Mobility, local commerce, and delivery also performed solidly, with demand, user engagement, and expanding platform capabilities jointly supporting revenue growth. Uber's U.S. business continued to accelerate, while Lyft achieved growth in North America, particularly in Canada and smaller markets. Both companies view autonomous driving as an opportunity to expand their addressable markets. Uber reiterated plans to enter 15 cities by year-end, while Lyft plans to open its Nashville fleet base in October. DoorDash has strong demand and improving unit economics but continues to invest in areas such as rebuilding its technology platform and automation; Instacart accelerated both new-user acquisition and engagement among existing users, with enterprise services and advertising emerging as new growth areas; Lime issued its first earnings report following its listing, demonstrating progress in subscriptions and market expansion while continuing to balance near-term profits against capital expenditures. Investors must still determine whether ride-hailing platforms will become the primary demand aggregators for autonomous driving networks or whether autonomous vehicle operators and automakers will capture more customer relationships and unit economics. On margins, companies are simultaneously experiencing structural efficiency improvements and reinvestment. Tight headcount control, automated customer support, and high-margin retail media revenue support core margins, but the resources saved are being reinvested in AI computing clusters, custom chips, autonomous delivery R&D, and international expansion. The market therefore prefers companies that can demonstrate immediate AI monetization. The report compares the current transition of platforms toward AI-native models to the desktop-to-mobile transition from 2008 to 2014: the process may involve rising investment, more challenging user growth trajectories, and greater reliance on new traffic sources, loyalty, and direct traffic. AI token usage and spending could also offset savings from streamlining non-core businesses and headcount. Over the past six months, the S&P 500 rose 11%, while Goldman Sachs-covered companies collectively gained 9%. The report believes these concerns have already been partly reflected in share-price performance, but 2027 operating guidance will remain critical for assessing the path of growth investment and margins.

Analysis framework

The report first aggregates actual second-quarter results, management guidance, and variances relative to market consensus expectations, then examines the direction of revisions to 2026 revenue and earnings forecasts compared with July 1 and 12 months earlier, while also referencing share-price performance, average 31-day RSI, and app engagement data. It then reviews operating drivers across subsectors including digital advertising, e-commerce, cloud computing, online travel, and mobility and delivery, and converts unresolved questions into topics to raise with management during the conference.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  AI Computing Supply-Demand Analysis

  By comparing demand for AI services with the supply of power, data centers, and available computing capacity, the report explains why cloud providers' capital expenditures, backlogs, and pricing remain supported and concludes that the supply-demand gap may persist through 2028.

• Event-Driven Strategy and Behavioral FinanceExpectation Gap/Expectation Management

  Comparison of Results, Guidance, and Market Consensus Expectations

  The report compares second-quarter revenue, other operating metrics, earnings, and next-quarter guidance against consensus expectations and combines these with forecast revisions to determine which operating trends exceeded or fell below investors' prior expectations.

• Corporate Fundamentals and Financial FrameworkOperating/Financial Leverage Analysis

  Balancing Growth Investment and Margins

  The report analyzes how operating efficiencies from headcount discipline, customer support automation, and high-margin advertising revenue are offset by investments in AI infrastructure, depreciation, R&D, and international expansion, thereby assessing the future margin trajectory.

• Quantitative/Factor/Portfolio Theory

  Comparison of Average 31-Day Relative Strength Index and Share-Price Performance

  The report presents average 31-day RSI and share-price performance around earnings and year to date for each subsector to help assess market momentum and the extent to which expectations have been priced in, rather than to form standalone investment conclusions.

Asset mapping & comparison

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

• Amazon（AMZN）/AWS

  AI and non-AI workloads jointly drive cloud revenue growth, while the e-commerce ecosystem and scale advantages also support the consumer business.

  Strengths

  AWS revenue grew 37% year over year, backlog increased 154% year over year, and operating margin was approximately 39%; customer demand exceeds available capacity.

  Weaknesses

  Power and data center constraints will leave AWS supply-constrained through 2026 and potentially into 2027.

  Comparison

  Combined backlog with Google Cloud exceeds approximately $1 trillion, and both are major beneficiaries of enterprise AI adoption.

  Risks

  Depreciation pressure from high capital expenditures and whether growth and returns on capital can be sustained after capacity expansion.

• Alphabet（GOOGL）/Google Cloud

  Benefits from both cloud AI demand and AI-driven monetization of search and advertising.

  Strengths

  Google Cloud revenue grew 81% year over year, with backlog of approximately $514 billion; demand for Gemini, TPUs, and enterprise AI deployments is growing.

  Weaknesses

  Power supply and data center capacity constrain service availability, while new business models for AI search are still evolving.

  Comparison

  Like AWS, it benefits from demand exceeding supply, although investors also compare their custom chips, incremental margins, and capital intensity.

  Risks

  The timing of returns on AI investment, depreciation expenses, and the impact of changing search behavior on engagement and monetization.

• Meta Platforms（META）

  AI improves ad targeting, creative generation, conversion, and advertiser returns while driving new product innovation.

  Strengths

  Advantage+ and broader AI advertising solutions continue to gain adoption, and second-quarter advertising performance was broadly strong.

  Weaknesses

  Spending on infrastructure, computing capacity, talent, and model development continues to rise.

  Comparison

  Alongside Alphabet, it is a major digital advertising platform and continues to capture incremental share through scale and AI automation.

  Risks

  Whether AI monetization can justify greater capital intensity and the pressure of depreciation on future profitability.

• SpaceX（SPCX）

  The report views it as a participant associated with AI infrastructure demand and expanding computing deployments.

  Strengths

  Management stated that computing deployment plans are accelerating, demand continues to exceed supply, and it is optimistic about the commercialization of terrestrial and longer-term orbital computing.

  Weaknesses

  Orbital computing remains a longer-term monetization opportunity.

  Comparison

  Together with AWS and Google Cloud, it reflects tight AI infrastructure supply and demand, although its commercialization path and infrastructure model differ.

  Risks

  The pace of new supply deployment and the return pathway for substantial investment.

• Digital Advertising Platforms（APP、RDDT、PINS、U）

  Advertising budgets continue to flow toward platforms that deliver measurable performance, clear user intent, and AI-enabled conversion improvements.

  Strengths

  Pinterest, Reddit, and Unity maintained momentum in the second quarter, while overall industry advertising demand remained healthy.

  Weaknesses

  Pre-earnings market expectations were elevated for some companies, meaning even solid results may not fully satisfy expectations.

  Comparison

  These companies are smaller than the major platforms but attract budgets through specific user intent and performance measurability.

  Risks

  The durability of advertising budgets, changes in the macroeconomic environment, and AI-driven reshaping of search and consumer discovery.

• E-commerce Platforms（AMZN、W、ETSY、STUB、GRPN、PTRN）

  Resilient consumer demand, platform scale, personalization, and monetization through advertising and services jointly support industry performance.

  Strengths

  Wayfair accelerated share gains, Etsy's buyer trends improved, and StubHub achieved share gains, margin expansion, and free cash flow.

  Weaknesses

  Groupon's revenue remains in recovery, while some platforms must continue demonstrating that improvements in customer acquisition and engagement are sustainable.

  Comparison

  Platforms with greater scale, assortment, fulfillment density, and stronger customer ecosystems have clearer advantages.

  Risks

  Weakening consumers, changes in customer acquisition costs, and agentic commerce reshaping traffic, conversion, and platform economics.

• Online Travel Platforms（BKNG、ABNB、EXPE、TRIP、YOU）

  Stable global travel demand and platform expansion support the businesses, although industry growth is normalizing.

  Strengths

  Large platforms have broad supply, strong brands, loyalty programs, and partner relationships while continuing to generate robust free cash flow.

  Weaknesses

  Lower-income consumers are more cautious about travel timing, booking windows, and spending; bookings directly generated through AI interfaces remain insignificant.

  Comparison

  High-end travel is healthier than the lower-income segment, while share performance may diverge between hotels and alternative accommodations and across regions.

  Risks

  Macroeconomic and geopolitical volatility, rising marketing intensity, and AI's impact on the long-term steady state and terminal value.

• Uber（UBER）and Lyft（LYFT）

  Mobility demand is improving, and both companies view autonomous driving as an opportunity to expand their addressable markets.

  Strengths

  Uber's U.S. business continues to accelerate, while Lyft is growing in North America and markets such as Canada; Uber plans to enter 15 autonomous-driving cities by year-end.

  Weaknesses

  The platforms' long-term roles in the autonomous driving ecosystem and the unit economics they can capture remain uncertain.

  Comparison

  Both are advancing autonomous driving partnerships, but Uber has a broader coverage plan, while Lyft's near-term milestone is opening its Nashville fleet base in October.

  Risks

  The timeline for scaling autonomous driving and potential changes in the competitive landscape, pricing, and take rates.

• DoorDash（DASH）、Instacart（CART）and Lime（LIME）

  Local commerce, grocery and retail delivery, subscriptions, and market expansion represent new sources of compound growth.

  Strengths

  DoorDash's demand and unit economics are improving; Instacart's customer acquisition and user engagement are accelerating; Lime is demonstrating momentum in subscriptions and market expansion.

  Weaknesses

  DoorDash continues to invest in rebuilding its technology platform and automation, while Lime must balance near-term profits against capital expenditures.

  Comparison

  DoorDash focuses on local commerce and delivery, Instacart is expanding enterprise services and advertising, and Lime is a micromobility platform.

  Risks

  Continued reinvestment may delay margin improvement, while the long-term returns of new businesses still require validation.

Key data

• Communacopia + Technology ConferenceSeptember 8–11, 2026, approximately 40 public and private companiesThe conference will be held in San Francisco and include fireside chats and one-on-one investor meetings
• AI Computing Supply-Demand GapExpected to persist through 2028The supply of available computing capacity, power, and data centers is lagging demand for AI services
• Google Cloud Revenue Growth+81% year over yearSecond quarter of 2026, with backlog increasing to approximately $514 billion
• AWS Revenue Growth+37% year over yearGrowth accelerated in the second quarter of 2026, with backlog increasing 154% year over year
• Combined Backlog of the Two Major Cloud PlatformsExceeding approximately $1 trillionRefers to the combined level disclosed by AWS and Google Cloud
• AWS Operating MarginApproximately 39%Reached a record despite rising depreciation pressure related to capital expenditures
• Expected Normalized Online Travel GrowthApproximately MSD-HSD% year over yearMost investors expect growth in the mid-single-digit to high-single-digit range
• Sector Performance Over the Past Six MonthsS&P 500 +11%, Goldman Sachs-covered companies +9%The covered sector underperformed the market by approximately 2 percentage points
• Uber Autonomous Driving Coverage PlanEnter 15 cities by year-endDeployment plan reiterated by the company following the second quarter
• Lyft Autonomous Driving ProgressOpen the Nashville fleet base in OctoberA near-term autonomous driving project milestone identified in the report

Impact & implications

The report believes the next phase of differentiation within the U.S. Internet sector will depend more on whether companies can convert AI investments into revenue, market share, and verifiable returns on capital, rather than merely on the scale of investment itself. Cloud computing, AI-driven advertising, and local commerce retain long-term growth support, but rising depreciation, consumer divergence, shifts in traffic gateways, and continued reinvestment may constrain margin expansion. Statements regarding 2027 operating priorities and capital allocation will be important indicators for assessing the quality of each company's growth.

Risks

• The timing, scale, and durability of returns on AI-related capital expenditures may fall below investor expectations.
• Greater capital intensity will increase depreciation expenses and may constrain future profitability and margin expansion.
• Elevated input costs and widening consumption divergence across income groups may weaken digital consumer demand.
• Changes in the macroeconomic environment may affect the durability of advertising budgets, travel demand, and customer acquisition efficiency across platforms.
• As AI reshapes search, consumer discovery, and traffic gateways, existing platforms' engagement, conversion rates, and marketplace economics may be affected.
• Online travel continues to face risks from geopolitical volatility, instability in certain travel corridors, and greater caution among lower-income consumers.
• Autonomous vehicle operators or automakers may control more customer relationships and unit economics, weakening the long-term role of ride-hailing platforms.
• AI token costs, infrastructure investment, international expansion, and automation R&D may offset efficiency gains from headcount reductions and streamlining non-core businesses.

What to watch

• Monitor how management teams discuss the durability of AI demand, capital expenditures, and 2027 operating priorities during the September 8–11 conference.
• Track the deployment pace of AI computing capacity, power, and data center supply, and whether the supply-demand gap continues through 2028.
• Observe whether AI investments generate measurable revenue growth, improved advertising conversion, and returns on capital.
• Monitor advertiser budget allocation and the durability of demand across major verticals such as retail, financial services, and technology.
• Track how AI search and agentic commerce reshape user discovery, traffic acquisition, conversion rates, and platform economics.
• Observe whether e-commerce companies can sustain improvements in customer acquisition, engagement, wallet share, and advertising and service monetization.
• Monitor global travel demand for the remainder of 2026, divergence among income groups, and online travel marketing intensity.
• Track Uber's progress toward entering 15 cities by year-end and Lyft's opening of its Nashville fleet base in October.
• Observe customer relationships, pricing, and take-rate allocation among ride-hailing platforms, autonomous vehicle operators, and automakers within autonomous driving networks.
• Monitor whether growth investments, AI token costs, and incremental depreciation offset margin improvements from headcount discipline, automation, and high-margin advertising revenue.