US Economic Weekly AI capex is picking up steam

US Economic Weekly AI capex is picking up steam

No signs of slowing down 14 August 2026

AI capex is and should continue to be a tailwind for growth. Hyperscalers’ capex Economics estimates continue to get revised higher and should rise again in 2027. The investment United States boom is generating positive second-order effects across the economy, i) through wealth US Economics effects, and ii) by boosting manufacturing production and employment in AI-related BofAS industries and data-center construction. These factors reinforce the resilience of the US Aditya Bhave economy even in the face of potentially higher-for-longer interest rates. US Economist BofAS The week ahead: FOMC minutes, IP, housing data

The Jul FOMC minutes (Wed, preview below) are the highlight of next week’s economic Stephen Juneau US Economist calendar. We also get Jul industrial production (Tue) and a lot of housing data: the Aug BofAS NAHB Index (Mon), and Jul housing starts, building permits and pending home sales (Tue). Other releases include Aug Empire Manufacturing (Mon), Jul import and export Shruti Mishra prices (which could marginally impact our PCE inflation estimates, Tue), and the Aug US Economist BofAS Philly Fed Index (Thu). There is no Fedspeak on the calendar at the time of this writing. July FOMC minutes: how many hawks? Sep hike threshold? See Team Page for List of Analysts The July FOMC minutes will be stale because the soft July jobs and inflation data since the Fed meeting have considerably reduced market pricing of hikes. Still, we will be Glossary looking to get a sense of how many FOMC participants (besides the three dissenters) CPI: Consumer Price Index wanted a hike or would at least have been willing to go along with one. We’re also curious about the committee’s thresholds for a September move, though we wouldn’t PMI: Purchasing Managers’ Index

expect anything too specific on this front. PPI: Producer Price Index

Data review: soft Jul data give the Fed breathing room NFP: Nonfarm payrolls Based on this week’s CPI and PPI data, we project a 0.22% increase in the core PCE in LFPR: Labor force participation rate July. This isn’t a great number at first blush – it annualizes to 2.7% – but roughly half of it was due to a spike in portfolio management, which should get revised lower in the Sep PCE: Personal Consumption Expenditures 30 methodology update. With payrolls also declining in July, markets have substantially priced out Fed hikes. For now, we are sticking with our call for 75bp of rate increases FOMC: Federal Open Markt Committee this year, starting in Sep. But risks have clearly shifted toward later/fewer hikes. GDP: Gross Domestic Product

SF: Seasonal Factor The US Economic Weekly will be on summer vacation until the end of August. The next SA: Seasonally Adjusted report will be released on September 4. SEP: Summary of Economic Projections

JOLTS: Job Openings and Labor Turnover Survey

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AI capex is picking up steam Stephen Juneau BofAS

• AI capex is and should continue to be a tailwind for growth. Hyperscalers’ capex estimates continue to get revised higher and should rise again in 2027.

• The investment boom is generating positive second-order effects across the economy, i) through wealth effects, and ii) by boosting manufacturing production and employment in AI-related industries and data-center construction.

• These factors reinforce the resilience of the US economy even in the face of potentially higher-for-longer interest rates.

AI capex shows no signs of slowing down We are now in the fifth week of earnings season and have received updates from the major AI hyperscalers: Microsoft, Amazon, Google, Meta, and Oracle. Savita Subramanian and our equity strategy team note that the latest earnings releases confirm that the capex cycle remains firmly on track and, if…