Well, Barkclay’s research is really just throwing cold water on AI investment, shall I say hype. Their analysis shows AI related spending boosted US GDP growth by about 1 percentage point in the first half of 2025. And yes, that would include OpenAI spending because it goes into the same buckets. But that contribution, according to them, is set to peak this year and fade rapidly. The five largest hyperscalers are projected to increase capital expenditures by roughly 30% through 2027 to 510 billion.

We’ve talked about this before. Most people know this. Uh that does sound massive, no doubt, but it represents a major deceleration from the 71% jump in 2025. When you adjust for inflation, the slowdown is even sharper. Barclays argues the market is overestimating the aggregate impact.

Total US business investment runs over $4 trillion annually. So even hundreds of billions of dollars from tech giants is still relatively small. Dare I say that? Most of the growth momentum though is already behind us. According to the report on productivity gains, the report is equally skeptical.

Permanently lifting productivity growth by just one percentage point would require the entire trajectory of business investment to increase by about 20%. We last saw that kind of sustained spending in the 1990s.com boom. The bottom line from this report is that AI spending levels are no doubt impressive, but growth rates drive GDP. Those rates are decelerating fast.

Frank, >> uh, Christina, very interesting note. Actually, that analyst is going to be on CNBC later today at 2 PM on Power Lunch to talk a lot more about that note. Christina Partners, thank you very much for that. All right, I want to toss it around to you guys. Does it matter to the market if the AI capex boom is slowing down in the back half of the year?

Does it matter to the to the market when uh, a lot of this is based on AI, you know, software, other things like that? Do we need that capex boom? Steph, I’m going to turn over to you because we were just talking about materials. Does it matter? Do we need that to continue and still accelerate so many deals being announced to move the S&P higher?

>> I mean, I think that 400 billion from the hyperscalers this year is peak for sure. I mean, you’re not going to grow that level every year, but I think you’re going to see a compound annual growth rate in AI capex spend of something like 25% between now and 2030. And what I um find comfort in is it’s not just the hyperscalers that are spending on capex. It’s the utility companies. They’re going to spend $80 billion this year on AI, the grid power, that kind of thing.

Industrials are going to spend $200 billion on AI, on data centers, grid power, the whole thing. So what I’m encouraged about is it’s many, many different industries that are seeing the demand and seeing the need to spend. And I’ve tal we’ve talked about this before. or when you talk to chief technology officers, they’re spending on two things and they have said to me, many of them have said to me double digits between now and 2030 on AI because they’re still learning about it and cyber security because they can’t afford to wake up and lose their business. So those are the two areas that I remain very bullish on.

Does the market need this this these kinds of levels of spend to grow higher? I don’t think so because you’re seeing this broad very broad-based growth. >> Yeah. Speaking of, we did have some other announcements and you mentioned uh it’s a wide variety of companies spending uh Black Rockck, Nvidia, and XAI uh taking over a $40 billion data center. We also had Microsoft strike a deal with a startup called Inscale for 14 billion.

Uh that company pushing for an IPO. So, we are seeing money being spent outside of just simply capex for for rocks in some cases. Uh in this case, it’s energy. Joe, you’re nodding on this one. uh it’s it’s the utility story and and Steph’s done a phenomenal job all year talking about it as well but throughout 2025 it’s it’s been a place that the ETF has been in whether it’s Verdiff Steph I think you’re there as well Vistra Constellation Energy today I believe traded to a new all-time high a name we don’t own which we’re seeing very strong momentum is Duke Energy that gives you the electricity assets so the the thematic investing and the thematic investing elements surrounding utilities I think is very real.

And I think if you’re sitting with a portfolio where you have 3% correlated to what the energy sector waiting is in the S&P and you’re waiting for ENTPs to wake up, >> why not look in the direction of utilities? Because you have oil sub $60 and this is an administration that very clearly believes in a low energy price and is allowing for a lot of offshore drilling. I think utilities should act as the replacement there and some of the names I mentioned are proving a confirmation of that. >> So, by the way, as we kind of shift the conversation away from chips for once, when we’re talking about AI, by the way, announcement, we’re going to show an ARM chart right here. Uh, an announcement that Meta is tapping ARM holdings to power AI for Facebook and Instagram.

Take a look. ARM shares, they’re up just about 2% right now. This just crossing right now. So, the second we move away from chips and all that, of course, there’s another announcement. We continue to see these series of announcements.

Um, Jim, I want to come over to you. You own Nvidia. Is this starting to get concerning that we’re seeing these these announcements related to chips involving so many other companies outside of Nvidia, whether it be AMD, Broadcom, a lot of other names seem to be getting in the mix? And it seems like just a few months ago, we were talking about this incredible moat that Nvidia had. >> Well, the simplest answer to that is that the backlog for Nvidia chips is kind of off the charts.

So, I’m not really worried about that. If I were a customer of Nvidia or a prospective customer, I would look at it and say I’ve got to go somewhere else to get chips if I want to get them in the near term. Um, so I’m really not worried about Nvidia from a fundamental point of view. Uh, nor am I from a technical point of view and not to not to rehash what we were talking about 10 minutes ago, but I do believe Joe is right and everybody else that the, uh, rally is going to continue through year end. Whatever concerns I may have, I think there’s just going to be the chase for performance and that’s going to center on Nvidia.

That is the bellweather of the bellweather trade which is the artificial intelligence trade. >> Yeah. By the way, we had Brad Gersonner on our air earlier on Squawkbox. He’s saying Nvidia is going to compound over the next three to four years. Joe, you also own this name as well.

Agree with that take that this this company due to backlog or other issues. Has a very long runway. >> I would agree with that. Look, Brad Gerston knows far more uh about technology spending than I ever will. So, I will I’ll take Brad at at what he’s suggesting on air.

Uh but it’s very clear to me just from the standpoint of here you sit October 15th and if I’m sharing with the viewers that I think a chase for performance is going to be underway through the remainder of the year I find it very difficult to believe that the semis are not going to participate that and continue to do what they have done which is rally nearly 85% off of the April lows. >> Uh link you also own Broadcom. Do you see Broadcom continue to participate in some of this rally or is it becoming less of a basket of stocks that you want to look at like the SMH and more individual winners? >> I mean, I like Broadcom. I’ve liked Broadcom for 5 years.

Uh I’m not crazy about the valuation at this moment in time, but they think AI for them by 2028 can be a hundred billion dollar opportunity for them. And I like their diversification. I I like that they have software. They and they have the the AI piece, they have the non-AI piece, they have the infrastructure piece. and they last quarter just crushed it.

They beat on across the board and I think they’re going to continue to do that and they announced their fourth customer in custom AS6 that they think is a $10 billion opportunity for them. So I think they’re a winner. What I think is really interesting is it’s up 107% in the past year and Nvidia is only up 37%. >> Yeah. Uh CEO Hawkan also seems to know how to navigate not only AI but the administration, some trade issues and everything else.

Seems to be a very sophisticated operator in the current landscape. Liz, I want to come over to you. Chips are also a cyclical area. Um, do you believe that this rally can continue and that investor confidence can stay in these chips? We just saw that report from Christina parts and that the AI capex boom may have peaked.

Wouldn’t that kind of be a read in the chips as well? >> I think the rally can continue at least through year end and the the growth boom maybe has peaked, but capex is going to continue and there’s going to be announcements about them continuing to spend just because of how they’ve been rewarded in the market for doing so. I think what can happen next year is if we start to hear announcements that the revenue is actually coming through on all of that spending. What we’re looking for as investors is justification of those valuations. And so far that’s been justified by the capex spending by looking out into the future.

Here’s how things are going to go. If we start hearing next year that the rubber has hit the road, revenue is actually being generated, the use cases are real, and it’s benefiting companies across a number of sectors, then that justifies those valuations as well. So, I do think chips can continue to do well here, especially for the chase into the end of the year. I still think software has opportunity. Cyber stocks have been something to talk about this year for sure.

That’s a long-term trade for me. That’s something that I don’t think the demand for is going away anytime soon, if ever. But I think software can benefit as we shift from capex spending into real material benefits of AI. Well, another announcement today as we just mentioned, ARM being tapped by Meta to Power AI on Facebook and Instagram.