Mag 7 Plans to 'FOMO' Into $650B Tech Investment Despite Trump's U.S. Manufacturing Push
Main Idea
The 'Mag 7' tech firms are projected to spend $650 billion in capex and R&D this year, surpassing the U.K. government's annual public investments, driven by a shift towards AI and digital technologies despite broader economic declines in non-IT sectors.
Key Points
1. The 'Mag 7' (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) are expected to spend $650 billion in capex and R&D in 2025, exceeding the U.K. government's annual public investment.
2. U.S. corporate IT spending rose 13.6% year-over-year to $1.45 trillion, accounting for over 40% of total private fixed investment, while non-IT investment fell by 4.9%.
3. The shift towards 'bits' (digital/AI) over 'bricks' (traditional sectors) is partly driven by FOMO (fear of missing out) on AI opportunities, as noted by Lloyds Bank strategist Nicholas Kennedy.
4. The Biden administration's CHIPS Act initially boosted IT investment, but the momentum has shifted towards AI-related projects, further diverting resources from traditional sectors.
5. The crypto market has benefited from favorable regulatory policies under Trump, including bipartisan-supported measures on stablecoins.
Description
While President Donald Trump's tariff war aims to spark a manufacturing boom at home, corporate America's spending focus remains firmly on "bits" rather than "bricks and mortar." This contrast is evident in the spending patterns of the Magnificent 7 (Mag 7) stocks – a group comprising large-cap tech companies, including Alphabet (parent company of Google), Amazon, Apple, Meta Platforms (parent company of Facebook and Instagram), Microsoft, Nvidia, and Tesla. These firms are expected to cumulativ...
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