After years of infrastructure development, 2026 is set to become a pivotal year for AI technology validation, shifting market focus from pure capital expenditure to practical utility and commercial returns at the application layer.
Goldman Sachs' global investment research team, led by analyst Eric Sheridan, released a 2026 internet industry outlook report. The report highlights that with the increasing adoption of general-purpose large language models (LLMs) and chatbots in 2025, 2026 may mark a turning point in consumer computing. Market attention will transition from simple subscription models to diversified monetization avenues, including advertising, e-commerce, and agent capabilities. Goldman Sachs emphasizes that AI must continue delivering momentum across infrastructure, model platforms, and applications to avoid falling into Gartner’s "Trough of Disillusionment."
Despite concerns over "overbuilding," Goldman Sachs expects AI-related capital investments to remain high in 2026. Data shows that market expectations for capital expenditures (Capex) at Amazon, Google, and META in 2025 and 2026 have been revised upward by 46% and 80%, respectively, totaling an additional $250 billion over two years. Whether these massive AI investments translate into visible profit returns will be a key driver of investor sentiment and corporate performance over the next 12-18 months.
Here are Goldman Sachs' top 10 focus themes for the U.S. internet industry in 2026:
1. **Consumer AI Landscape Evolution: The Rise of Generative AI, Search, and Agent Experiences** AI discussions are shifting from infrastructure to applications. With LLM adoption rising in 2025, 2026 could be a tipping point for consumer computing habits. Beyond paid chatbot subscriptions, monetization will expand into advertising, commerce, and agentic capabilities. The integration of "agentic AI," capable of multi-step planning and autonomous decision-making, will blur the lines between search and applications, reshaping consumer behavior.
2. **Blurring Lines Between Advertising and Commerce: Social Commerce, Creators, and Retail Media** Traditional advertising and e-commerce are converging into partner-driven models. Social platforms are enhancing mid-funnel experiences (e.g., AI shopping assistants) and logistics partnerships to accelerate social commerce. Meanwhile, e-commerce platforms like Amazon and non-traditional retailers (UBER, DASH, CART) are capturing more ad budgets through retail media networks. Amazon’s ad business is projected to grow at an 8% CAGR from 2025–2030, with creators playing a pivotal role in driving traffic and conversions.
3. **AI Reshapes the Advertising Landscape** Digital advertising is among the most mature verticals for AI adoption. Platforms’ AI/ML capabilities will determine future ad revenue growth and market share. Tools like Google’s Performance Max and META’s Advantage+ automate ad creation, targeting, and creative generation, boosting efficiency. Emerging tools from APP (Axon 2.0), U (Vector), and PINS (Performance+) are redistricting industry profits, favoring large platforms with data and compute advantages.
4. **AI Investment Cycle: Evolution of the Compute Stack** AI Capex remains elevated, with Amazon, Google, and META’s 2025–2026 expectations sharply raised. While capital intensity may peak in 2026, pre-2023 levels are unlikely to return soon. Cloud providers are demonstrating healthy ROIC through accelerated cloud revenue and ad recovery. Investors will focus on how companies offset GAAP earnings drag from depreciation, especially with shorter server lifespans.
5. **Competition in Local Commerce** On-demand delivery platforms (UBER, DASH, CART) are expanding into groceries and retail to boost retention. Cross-platform users show higher retention and spend 3x more than single-platform users. Meanwhile, Amazon plans to triple its delivery network by 2026, intensifying the speed race. Subscription services (Uber One, DashPass) aim to enhance lifetime value (LTV).
6. **Future of Mobility: Autonomous Driving, Affordability, and Adoption** Autonomous vehicle (AV) adoption will unfold gradually over 5–7 years, with ride-hailing evolving into "hybrid networks" (human + AV drivers). UBER and LYFT are expected to participate via partnerships. Waymo, the U.S. AV leader, is expanding to more cities. Scalable hardware should lower AV costs, improving affordability and penetration.
7. **Interactive Entertainment Evolution** Companies are diversifying touchpoints through new media (e.g., Netflix in gaming, RBLX’s Moments), live services (sports betting), and AI-driven content creation (RBLX, UBI tools). Netflix’s Warner Bros. deal underscores the pursuit of scale and content depth.
8. **Long-Term Shift from Mobile to Spatial Computing** META, Google, and Apple are investing in spatial computing (AR/VR), with AR adoption likely surpassing VR post-2026 due to everyday usability. Gaming will lead, followed by e-commerce and online betting.
9. **Health & Wellness: Network Effects and Consumer Adoption** Post-pandemic health focus is driving hardware-software integration (e.g., smartwatches with AI-powered subscriptions like PTON’s new system). Social health tracking is creating network effects, boosting app downloads and subscriptions.
10. **Balancing Growth and Incremental Investment** In 2026, companies will diverge in balancing growth investments and margins. Some will prioritize long-term growth over short-term profits, while mature sectors (e-commerce, online travel) must navigate customer acquisition costs amid volatile demand. Improved free cash flow will also fuel stock buybacks (LYFT, GENI).
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