Okay, this is something VERY IMPORTANT. AI is growing and scaling at an unprecedented rate, but that’s something we’re going to have to factor in come 2026.
AI Billions
AI money is flooding the system. Hard cash. Serious scale. Global capital spending on AI barrels past $571 billion by 2026. That number matters because it’s not hope—it’s purchase orders. Data centers. Compute contracts. Infrastructure so expensive it forces commitment. And when OpenAI locks in a $38 billion computing deal and Microsoft drops $9.7 billion on capacity, the message is blunt—this cycle isn’t theoretical. Beautiful, right?
The Way It Works
This is how the machine works. Massive AI capex pours into computing power. That spending lifts corporate earnings—especially tech. The S&P 500 doesn’t drift higher by accident; it’s being dragged. Earnings growth hits 14.4% in 2026, with roughly half coming straight out of technology. That math pushes the index toward 7,500. Some models widen the lane—7,400 to 7,600—on the same drivers: consumer spending, AI investment, looser rules.
And the gravity well deepens. Alphabet’s advertising and cloud growth accelerates. Microsoft doubles data center capacity within two years. By 2026, those two alone outgrow the combined market value of Nvidia and Palantir—$4.8 trillion today. That’s not a vibe shift—it’s capital rotating toward platforms that own distribution and compute at once.
But—and this matters—the same mechanism cuts both ways. Higher interest rates and inflation compress valuations. If AI spending slows, the downside snaps fast. A pullback of long-term growth expectations to early‑2023 levels drags the S&P 500 down about 20%. No drama. Just math.
The Verdict
The AI stock market in 2026 looks spicy because it is. Enormous spending. Real earnings. Index-level lift. But it’s also brittle. This trade survives on continued capex momentum and forgiving financial conditions. You don’t get endless upside without pressure building underneath.
So here’s the call. The winners are the companies turning AI spend into durable cash flow—Alphabet and Microsoft sit squarely there. The risk isn’t hype exhaustion. It’s macro tightening that pulls the valuation rug. Ride the machine. Watch the rates.
Just don’t pretend this thing can’t break—because it absolutely can—so keep a careful eye on the future as we dive head-first into new territory.