If you build it, they will come
AI infrastructure is currently the engine of US growth.
Published: JULY 27, 2026
Analysts estimate AI-related investments now account for up to 2% of the entire US economy. Furthermore, US GDP growth would be tepid at best without the AI buildout – a remarkable thing, given how new the AI story is.
For now, it’s the infrastructure investments themselves that are driving AI, rather than the consumer utility that will come from those investments. Data centers and everything in them are being built, as the real estate developers would say, “on spec,” without much certainty from the end user. “If you build it, they will come,” the theory seems to be.
The analogy to real estate is worth considering. At a time when US home affordability is near record lows, new residential construction is about one-third below the levels seen in April 2022 (which was the post-2008 peak). Elevated mortgage rates have scared off home buyers, but data center developers’ access to capital is strong, thanks to the deep pockets of the hyperscalers. Data centers therefore represent an opportunity for construction jobs that might otherwise be tough to find given the weakness in homebuilding.
One risk of the AI infrastructure buildout is that it could move inflation higher. It’s true that in the longer term, AI is expected to be productivity enhancing and disinflationary. The hyperscalers, however, are due to spend more than $700bn this year on data centers and other aspects of AI infrastructure. That’s quite a stimulus; we shall have to see if it drives prices higher.
Our outlook:
Eventually, AI will deliver strong advantages to sectors such as Health Care and Financial Services, but for now much of the benefit is flowing to Technology and to sectors such as Industrials, Materials and Real Estate. Meanwhile, growth and value investing are being shaken up as indexers struggle to categorize companies in this new era, underscoring the importance of active management for thoughtful investors.
June’s inflation readings were an encouraging sign that inflation is receding. If that continues, the likelihood of a sticky soft-landing scenario or even a disinflationary reacceleration increases. A reignition of inflation would signal a “stagflation lite” scenario. The fear in that case is that the Federal Reserve might hike rates which could, eventually, lead to a hard landing.
Our four economic scenarios:
- Sticky soft landing — Inflation moderates gradually, growth slows but remains positive and the labor market cools but remains healthy.
- Inflation persistence (Stagflation lite) — Growth weakens while Inflation remains sticky from energy, wages, tariffs, and geopolitics.
- Disinflationary reacceleration — Inflation cools while growth accelerates; AI/productivity cycle broadens.
- Downside shock/Hard landing (Economic recession: tail risk) — Financial conditions tighten as the labor market deteriorates rapidly and credit stress rises.
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