AI Capex Surge Lifts Growth Equities

Software and IT equipment investment is currently adding a record 134 basis points to quarterly U.S. GDP growth, with AI-related spending the dominant driver. This single category has become a material macro tailwind, unusually large for one component of private nonresidential investment.

Historically, periods when ICT and digital investment rise sharply as a share of GDP have coincided with above-trend U.S. growth and sustained outperformance of technology and growth equities, as seen in the late-1990s internet buildout, the mid-2000s enterprise software wave, and the 2010s cloud cycle. In each case, productive deployment of new technology translated into stronger earnings for firms tied to the capex.

The current AI investment cycle is directly levered into semiconductor names like NVIDIA (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO), which supply core compute and networking for data centers. Large software and cloud platforms such as Microsoft (MSFT) sit on the demand side, monetizing AI through cloud consumption and AI-infused enterprise software.

With AI-related software and IT equipment now a meaningful contributor to GDP, macro and equity performance remain increasingly sensitive to the trajectory of this capex. Continued or accelerating AI investment would historically be consistent with ongoing support for growth-oriented sectors and the broader U.S. equity market tied to technology and digitalization, while any slowdown would remove a significant pillar of recent economic strength.