Indiana Trust Wealth Management
Investment Advisory Services
by Clayton T. Bill, CFA
Vice President, Director of Investment Advisory Services

  • The U.S. equity market, represented by the S&P 500 index, slipped 1% for the week.
  • Capital spending on AI by the five big US hyperscalers is staggeringly massive, yet it is expected to expand dramatically in the coming years.

NVIDIA’s stock reached the $1 trillion market capitalization threshold in 2023. It tripled its valuation in about a year, and this week it became the first company in the world to reach $4 trillion in market cap. The stunning expansion of NVIDIA’s valuation is driven by its near monopoly on the design of the advanced microchips that run AI infrastructure. Most companies are shifting their capital spending to focus on AI, which has become the future of technology. Viktor Shvets at Macquarie Capital believes that AI is better regarded as the pinnacle and the escape velocity of the Information Age.

Ford’s CEO Jim Farley made waves last weekend when he opined that AI would wipe out half of all white-collar jobs. (Of course, no mere robot can replicate this weekly note.) Mr. Shvets further posits that it is only a matter of time before the fusion of AI with robotics, cloud computing, and 3D printing aggressively disintermediates blue-collar workers. Some economists counter that jobs will be created that have not been envisioned today. No one knows what the impact of AI will be on the global economy or employment.

What is increasingly clear is that it is still the early innings for the AI-driven stock market. Mr. Shvets notes that the five big AI hyperscalers (Meta, Alphabet, Microsoft, Amazon, and Oracle) invested more than $500 billion in AI in the year through March, up 85% when compared to the run rate in 2021. This represented around 37% of those firms’ revenues. The current expectation is that capital spending and R&D by the five big AI hyperscalers will rise to more than $1 trillion by 2029.

There has been much ink spilled over the stratospheric valuations of the top names in the S&P 500. Those names are solely responsible for the market’s overall elevated P/E relative to history. When will all the investment in AI begin to bear fruit? Bank of America’s Savita Subramanian notes that Corporate America has shown the ability to reap the benefits from technological leaps in the past, and that it appears that productivity is once again rising for the largest firms in the US (and by extension, the world):


Sources: Sam Ro, Savita Dubramanian, Bank of America, July 2025

Rising S&P 500 labor productivity is a positive development for investors. It shows that businesses still have some runway for the deployment of AI, and it helps justify the explosion in valuations in mega-cap tech names. That said, while the biggest tech companies in the stock market continue to get bigger, it is still unknown who the winners will be five or ten years from now from the current tidal wave of AI capital spending.

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