We’ve now heard from six of the seven AI kings on Q1.
Remember, just months ago there were questions about whether the huge capex plans from this group would go forward, after the DeepSeek disruption of late January.
They answered the questions with $300 billion worth of capex planned for 2025.
Meta just raised its planned capex by 10%. And Apple just committed to spend $500 billionover four years.
And Satya Nadella, head of Microsoft, gave several signals this week that the technology revolution is accelerating.
He said they are bringing on data center capacity (and executing the plan to spend $80 billion in capex this year) but customer demand for those computing resources is outstripping their supply.
And that has a lot to do with this: The large language model capabilities are (in his words) “doubling in performance every six months.”
And clearly there has been a significant breakthrough in the past month or so, as he said Microsoft processed 100 trillion tokens in the quarter, half of that in the past month alone.
That AI workload processing is up five-fold from a year ago.
This explosive growth is all about AI agents automating tasks, from designing infrastructure, building and executing marketing plans to developing software.
With that, we should expect a productivity explosion ahead.
And hot productivity tends to be very good for economic growth.
Jerome Powell himself presented back in 2016 at the Peterson Institute (here), that high productivity growth is a driver of a higher long-term potential growth rate of the economy.
That’s good news. Because it means we can see real wage growth — the kind that restores purchasing power and quality of life (catching up to the reset in the level of prices).
And importantly, productivity driven wage gains are non-inflationary because rising wages are offset by rising output.
So, stepping back from the media and geopolitical noise, this is the big picture — we’re in the early stages of an industrial revolution.
If you want to own the stocks of the companies building the infrastructure to power AI, the companies delivering the capabilities of AI to hundreds of thousands of businesses, and the companies that will best leverage the productivity enhancements from AI, you can find them in our carefully curated AI-Innovation Portfolio.
If you haven’t joined us yet, now is a good time.