Spending on AI has become so massive that it may be a catalyst for the whole economy rather than merely a means of boosting stock market profits.
The economy would be in or near a recession if US tech businesses hadn’t significantly increased AI capital expenditures this year, according to a note sent by George Saravelos, Deutsche’s global head of FX research, on Tuesday.
His opinion was expressed the day after Nvidia said that it will spend $100 billion in OpenAI as part of a collaboration that would enable it to develop and expand data centers utilizing Nvidia’s hardware.
Saravelos noted, “The good news is that the AI super-cycle may be helping mute the negative supply (immigration) and demand (tariffs) shocks hitting the US economy right now.” The statement that NVIDIA, the primary provider of capital goods for the AI investment cycle, is presently bearing the load of US economic expansion may not be an exaggeration.
He did, however, also express concerns about the future of this kind of investment and what it would entail once the enormous capital expenditures of recent years start to decline.
The bad news is that capital investment must continue to be parabolic if the tech boom is to continue boosting GDP. This is not likely at all.
As investors plan for the economic changes of 2026 and factor in AI as a driver of both economic development and stock market returns, that presents some challenging challenges. The development of the underlying AI infrastructure is driving growth in 2025, but those projects will eventually be completed.
Will AI-driven productivity increases take over once the factories are built? Saravelos asked. And how far will those advantages be dispersed, in comparison to the location of the factories?
Although the bank has not yet responded to such queries, he said, analysts at the company are taking them into consideration when predicting the US dollar’s performance in the upcoming year.
