An acyclic capex cycle
Continued growth in capital spending could help offset higher energy prices, according to our Research analysts. AI investment continues to be revised up, with top technology firms on track to spend almost $700 billion on capital expenditure in 2026 alone, up 36% from last year. The AI effect is also showing up in earnings. Our Equity Research strategists expect aggregate earnings per share for the S&P 500 to rise 16% this year, which would be the strongest year of growth since the post-pandemic rebound.
This spending is not limited to AI; Western companies and governments are also investing more in energy infrastructure and defence. Global defence spending hit $2.7 trillion in 2025 and is heading toward $3 trillion by year-end. Global energy investment reached $3.3 trillion in 20251, driven by the energy transition and grid investment. Combined, these figures indicate a large global investment impulse. As much of this investment is acyclic, it should continue even if markets fluctuate.