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Goldman Bankers See AI's Next Wave in the Physical Economy

June 26, 2026 at 09:09 EDT

Robotics
Infra & Chips
Finance

Goldman Sachs bankers say the next phase of the AI boom will extend into the "physical economy" — factories, mines, utilities and oil rigs. Reported exclusively by Axios on June 26, 2026, the view is echoed in the firm's investment banking report "Harnessing AI for the Real Economy," which puts "Physical AI and the New Industrial Revolution" front and center. Axios

June 26, 2026 · Goldman Sachs Research

AI's Next Wave Moves Into the Physical Economy

After a software-led first phase, Goldman argues the real frontier is factories, mines, utilities and oil rigs — the heavy assets that AI runs on. Software is under 0.5% of world GDP; the remaining 99.5% is "only just beginning."

$7.6T

Global AI infrastructure investment, 2026–2031 (compute, data centers, power)

+35%

HALO heavy-asset basket excess return vs. capital-light peers

<0.5%

Software's share of world GDP — the physical 99.5% is the next frontier

Tech M&A Has Already Lapped Last Year

2026 year-to-date deal value vs. all of 2025 — same scale, billions of USD.

$334B

Full-year
2025

$566B

2026
year-to-date

US AI-related spending also climbing — from ~$650B to over $800B annualized by year-end 2026.

The Bull Case

The question among manufacturers has shifted from "whether to adopt" to "how quickly to automate." Capital-intensive HALO assets — power grids, pipelines, transport, machinery — gain value as AI's physical constraints bite.

The Caution

Persistent bottlenecks loom — power, labor and memory shortages, data-center delays. Monetization is unproven and bubble concerns linger; even Goldman's own research warns AI's ROI is not yet fully demonstrated.

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