The Economy’s $700B Question: Can Markets Survive If AI Fails?

Summary

Eight market experts discuss the $700B AI capex boom, its role as economic stimulus, the severe selloff in software stocks, and rising tech layoffs. Views range from recession delayed by hyperscaler spending to a generational top forming. Christopher Mulan remains long equities, while others question the sustainability of AI-driven spending and productivity gains.

• AI capex by hyperscalers tops $700B for 2026, up 77% YoY, acting as massive economic stimulus.
• Software sector ETF IGV down ~16% YTD, with major names like Salesforce, Adobe, ServiceNow down 30-50%.
• Professor Steve Hanki notes US productivity fell in 2025, challenging the AI narrative.
• Agentic AI is driving real productivity spikes in IT, enabling one engineer to replace many workers.
• Tech layoffs are widespread, with some experts attributing them to overhiring in the zero-rate era.
• MAG7 balance sheets are shifting from cash-rich to levered due to data center spending.
• Technical analyst Christopher Mulan is long S&P 500, NASDAQ, and QQQ, citing money flows and momentum.
• OpenAI's financial struggles and Meta's CAPEX raise underscore risks in the AI spending cycle.