The abundance of AI spending and the shrinking of discretionary spending are already baked into investment positions, with “AI disruptees” such as information technology services, consumer finance and software near record lows and industrial stocks near record highs relative to consumer discretionary ones, the strategists said, per the report.
“We think it’s time to selectively pivot, as it is dangerous to underestimate the appetite of U.S. consumers, and capex strength may be more priced in than not,” the Bank of America strategists led by Savita Subramaniam wrote in the note, according to the report.
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The Wall Street Journal reported in August that investors and hedge funds had shifted from putting their money into cryptocurrency to investing in AI.
The change helps illustrate why chipmakers and other AI stocks have seen the types of surges once found in the crypto market, the report said.
Bloomberg reported Sept. 25 that Goldman Sachs Group strategists expect AI infrastructure spending by the five largest U.S. hyperscalers to reach $1.2 trillion in 2027, up from $800 billion this year.
After the 54% jump in hyperscaler capital expenditures in 2027, the Goldman Sachs Group team forecasts a 12% increase in 2028 that will bring that year’s total to $1.4 trillion, the report said.
Meanwhile, PYMNTS reported in August that consumers are combining small changes to protect essential spending. Consumers are trimming selected extras, buying store brands, checking prices from store aisles and moving more grocery spending to retailers associated with value. Some are also adding income, negotiating bills and adjusting payment timing, the report said.
Visa reported in June that consumers around the world are continuing to make discretionary purchases despite rising costs. Rather than cutting back, consumers are seeking deals, often with the help of digital commerce, the company said.
Visa Chief Economist Wayne Best said at the time in a press release that “consumers are finding more ways to compare prices and stretch their budgets.”
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