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AI infrastructure investment has emerged as a key driver of broader economic growth, with capital expenditures up 10% in the first quarter of 2026 and accounting for over two-thirds of real GDP growth, largely fueled by hyperscalers racing to meet surging compute demand.

What caught our eyes this week

The AI economy

It has been well documented that the build-out of infrastructure to support artificial intelligence is a dominant theme in equity markets, particularly at the top of the market-cap spectrum in the Magnificent Seven. We’re seeing the trend become increasingly relevant to broader economic growth as well. Nonresidential fixed investment (also known as capital expenditures, or capex) was up a staggering 10% in the first quarter, which accounted for over two-thirds of the 2.0% increase in first-quarter real GDP. Spending on equipment and intellectual property (two proxies for AI capex) is up to $3.2 trillion, or 13% of broader real GDP at $24 trillion. Most of this is driven by the major hyperscalers, who continue to raise capex estimates as they remain heavily constrained by their own infrastructure in their ability to meet customers’ demand for computing power. This broader trend has been a consistent tailwind for economic growth over the past several quarters and has gone a long way to smooth out some of the volatility in other components of GDP.

Graph showing the contributions of three different components to quarterly real GDP growth. The components are personal consumption, corporate capital expenditures, and everything else.

CHART OF THE WEEK: Cerity Partners, FactSet, through Q1 2026. Personal Consumption refers to Personal Consumption Expenditures. Corporate Capex refers to Nonresidential Fixed Investment.

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