Capital Economics expects AI investment to continue rising in 2027 before falling by around 10% in 2028. Hyperscalers are expected to spend $800 billion this year and at least $1 trillion in 2027, while AI-related revenue would need to increase tenfold by 2030 to justify those expenditures. The slowdown could shave 0.1 percentage point off US GDP growth in 2028, with a larger impact in Taiwan and South Korea. Economist Vicky Redwood expects the S&P 500 to fall 12% by the end of 2027, with technology-heavy indices declining even further, but she does not anticipate a major recession.
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