Is AI really THAT big of a deal when it comes to the US economy? Judging from the latest GDP figures, the answer is a resounding “Yes!”
Take a look at the MoneyShow Chart of the Day, which comes courtesy of Ed Yardeni’s Yardeni QuickTakes newsletter. It shows that high tech spending accounted for 55% of nominal nonresidential capital spending in the first quarter – the highest on record!
It’s an AI Economy and We’re All Just Living in it
Source: Yardeni QuickTakes
Overall, the economy grew at an annual rate of 2% in Q1. But business investment surged at its fastest rate in three years because of – you guessed it – investing on AI-related equipment and software. No wonder Ed headlined the issue “The Roaring 2020s Express Train.”
What’s more, the trend shows no sign of slowing. If anything, last week’s hyperscaler earnings reports suggest that capex spending could accelerate FURTHER. Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), and Amazon.com Inc. (AMZN) guided toward $725 billion in cumulative 2026 capex in their first-quarter reports. That’s UP from previous high-end estimates of $670 billion.
Having an economy increasingly dependent on one trend is great...as long as that trend persists. Fortunes can and are being made investing in direct and indirect AI plays. But at some point, the trend will end. Don’t let greed blind you to that immutable fact as a trader or investor!
