The global economy is experiencing the largest capex cycle ever, with nearly $5 trillion seen by the end of the decade-and it's not all AI spending | Fortune

"“I do believe this is the the largest capital cycle the global economy has ever experienced-that being the energy transition,” Eli Horton, a senior portfolio manager for TCW's equity products, told CNBC on Thursday. He cited three drivers to the capex boom: energy security, rapid growth in electricity demand, and ongoing efforts to decarbonize. Together, they will combine to unleash close to $5 trillion of spending by the end of this decade, Horton estimated, adding that he's confident the trend will endure across multiple decades.”"

"“After nearly two decades of stagnating, U.S. electricity demand is growing again due to a revival of domestic manufacturing, electrification of the economy, and more recently the AI frenzy,” he explained. “While skeptics may doubt the longevity of AI capex, Horton said the latest quarterly earnings from the hyperscalers show durability and accelerating revenue.”"

"“The stunning rally in Caterpillar's fortunes exemplify this thesis as its main businesses-construction equipment, mining equipment, and power generation-look to ride the capex wave,” he added. “GE Vernova is another example as demand for its gas turbines has soared after years of lagging growth.”"

"“Now they're sold out to 2030,” Horton said. “There's three companies in the world that make them. They have a lot of power at the table. It's important to recognize that.”"

Alphabet, Amazon, Meta, and Microsoft are investing hundreds of billions of dollars annually into AI. Capital spending is also accelerating in the energy sector due to the Iran war and closure of the Strait of Hormuz, which emphasize energy security. A senior portfolio manager described the energy transition as the largest capital cycle in global economic history. The capex boom is driven by energy security, rapid growth in electricity demand, and ongoing decarbonization efforts. U.S. electricity demand is rising after years of stagnation because of domestic manufacturing revival, electrification, and AI-driven demand. Hyperscaler earnings indicate durable and accelerating revenue. Construction and power equipment makers benefit as orders expand, including Caterpillar and GE Vernova, with turbine demand strengthening through 2030.

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