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The AI boom is sustainable, three Wall Street analysts argue in research notes this morning. Productivity gains from AI are expected to far outweigh current spending, they say, and capital expenditure on data centers and chips remains robust.
Stop worrying about the bubble in AI—its growth is sustainable, three Wall Street analysts from Goldman Sachs, JPMorgan, and Wedbush argued this morning in notes seen by Fortune.
Traders seem to agree, at least for now. Futures contracts for the tech-heavy Nasdaq 100 were up 0.55% this morning prior to the opening bell, after the index closed up 0.68% yesterday. The index is up 18% this year, despite worries that the AI boom bears a resemblance to the dotcom bubble of 2000.
Hemant Taneja, CEO of VC firm General Catalyst, was quoted in the Financial Times this morning saying: “Of course there’s a bubble … Bubbles are good. Bubbles align capital and talent in a new trend, and that creates some carnage, but it also creates enduring, new businesses that change the world.”
The FT’s report hinges on the fact that VC firms have plowed $161 billion into AI startups this year, and 10 of them—OpenAI and Anthropic among them—now have a collective valuation of $1 trillion. But none of them are profitable, the FT says.
We should all stop worrying and learn to love the AI boom, if new research from Goldman Sachs is correct. In a note titled “The AI Spending Boom Is Not Too Big,” Joseph Briggs and his colleagues say, “Anticipated investment levels are sustainable, although the ultimate AI winners remain less clear.”
The Goldman team argues that when deployed properly, the productivity gains from AI will far exceed the investment currently going into it.
“We are not concerned about the total amount of AI investment. AI investment as a share of U.S. GDP is smaller today (
The money going into AI-related capital expenditures (capex) will grow massively this year and next, according to Samik Chatterjee and his colleagues at JPMorgan. Capex across the AI “hyperscalers” will grow 60% this year and another 30% next year, they say.
“On a dollar basis, the growth implies a significant increase of more than +$100 billion of additional data center capex in 2025, the largest annual step-up to date, surpassing the record set in 2024. Importantly, the stronger trajectory is also anticipated to carry into 2026, where growth is now tracking at … more than +$80 billion for next year.” Capex will be in the region of $300 billion this year from Google, Amazon, Microsoft, and Meta alone, Goldman estimates.
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