Source: Fortune
Summary
Eli Horton, a senior portfolio manager at TCW, believes the global economy is experiencing its largest capital cycle ever, driven by the energy transition. He estimates that $5 trillion will be spent by the end of the decade, driven by energy security, growing electricity demand, and decarbonization efforts. The AI industry is also driving capital spending, with hyperscalers expected to spend over $800 billion this year, up 67% from 2025.
Our Reading
The numbers tell one story.
TCW’s Eli Horton sees a $5 trillion capital spending boom in the energy sector by the end of the decade. Meanwhile, AI hyperscalers are on track to spend over $800 billion this year. Horton points to Caterpillar’s resurgence and GE Vernova’s sold-out gas turbines as examples of the capex wave. Bank of America analysts predict next year’s hyperscaler spending could reach $1 trillion.
The energy transition and AI spending are creating a perfect storm of capital investment.
Author: Evan Null
Energy Transition Drives Capital Spending
The energy sector is experiencing a capital tsunami, with $5 trillion expected to be spent by the end of the decade. Eli Horton, a senior portfolio manager at TCW, cites energy security, growing electricity demand, and decarbonization efforts as drivers of this spending boom.
AI Hyperscalers Fuel the Fire
AI hyperscalers are also driving capital spending, with estimates suggesting they will spend over $800 billion this year. Bank of America analysts predict this number could reach $1 trillion next year.
Chipmakers Benefit from AI Spending
Much of the hyperscaler spending will flow to chipmakers that supply data centers with computing capacity. Bank of America expects pricing power and margins to hold for AI semiconductor vendors.
