Capital Group argues the AI capex cycle is triggering one of the largest periods of market dispersion in decades, undermining the dominance of passive index investing.
- Hyperscaler AI capex is projected to reach roughly 2.1% of U.S. GDP, exceeding historical peaks seen during the Apollo program or early internet buildout.
- More than 60% of S&P 500 stocks are outperforming the index itself, a major reversal from the narrow “Magnificent Seven” era.
- Industrials, utilities, materials and healthcare are increasingly benefiting from AI infrastructure spending rather than only semiconductor firms.
- Capital Group argues the Magnificent Seven now behave increasingly like “one giant concentrated tech position,” weakening diversification benefits inside passive indexes.
The deeper point is not merely that AI is bullish for equities. It is that AI is becoming physical. Power infrastructure, transformers, HVAC systems, steel, logistics and industrial machinery are now being pulled into the same investment cycle that originally centered on semiconductors and software.
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