The transformative power of artificial intelligence is reshaping global economies, from the Atlantic to the Pacific, by driving investment expansion and trade restructuring. This shift is directly boosting GDP growth in major economies and fundamentally altering the flows of cross-border capital and industrial supply chains. The macroeconomic uplift is already visible in the latest economic data, with the UK's second-quarter GDP growing by 0.4% quarter-on-quarter, with the information and communication sector contributing nearly half of that growth. Similarly, the Eurozone's economy expanded by 0.4% in the second quarter, exceeding market expectations, largely due to a sustained surge in AI investment.

Christian Nolting, Global Chief Investment Officer at Deutsche Bank Private Bank, identifies AI as the dominant structural theme for the coming years. "AI is, and will remain, a structural growth driver for the economy and capital markets, and we are only just beginning," he explains. Nolting notes that the transition to agentic AI is significantly accelerating momentum, with global token consumption for AI applications surging nearly twentyfold in just one year. Investment momentum is also reaching new magnitudes, with Goldman Sachs forecasting that capital expenditure by hyperscale cloud providers could reach approximately $1.1 trillion by 2027. The combined capital expenditure guidance for 2026 from Amazon, Google, Microsoft, and Meta alone is five to six times higher than it was five years ago.

Fixed investment accelerates in Europe

In Europe, the economic energy from AI is primarily manifested in capital expenditure, the construction of data centres, and the accelerated digital transformation of traditional industries. This wave of investment is underpinned by a strategic policy shift, with UK Prime Minister Andy Burnham, who took office in July, prioritising AI on the cabinet agenda and signalling a focus on "technological sovereignty" and industrial transformation protection. UK spending on plant, machinery, and equipment was robust in the second quarter, reaching £22.1 billion. High-tech manufacturing has benefited significantly, with output in the computer, electronic, and optical products sector growing by 10.7% year-on-year, leading all 13 manufacturing sub-sectors for the first time since early 2017.

Andrew Wishart, Senior Economist at Berenberg, suggests that the surge in information and communications technology investment indicates that the construction of computing infrastructure needed to support AI is becoming a key driver of corporate fixed investment. The European Commission has launched a €30 billion tender for "AI Super Factories" to build up to seven large computing hubs across member states, with a mix of public and private funding. The tender, which received 77 applications from 60 locations across 16 member states, will close on November 12, with results expected in early 2027. At the corporate level, Deutsche Telekom and Nvidia have launched an industrial AI cloud factory in Munich, and Siemens has started construction on a new supplier factory in Germany, with record data centre orders and a significant rise in AI-related revenue. In France, the central bank's business survey noted a recovery in industrial production driven by the tech and defence sectors, and the country's first exascale supercomputer is scheduled for deployment in 2026.

Asia's role as the global AI factory

Unlike Europe's focus on capital expenditure and infrastructure, major Asian economies have established themselves as the supply-side "global AI factory" through their strengths in semiconductor foundries and core component manufacturing. The ASEAN+3 Macroeconomic Research Office estimates that nearly half of global AI-related trade flows through the region, with AI-related exports accounting for nearly two-thirds of the region's export growth in the first quarter. This supply chain strength has led AMRO to upgrade its 2026 economic growth forecast for the region to 4.1%. Data from key export-oriented economies is explosive, with South Korea's July exports surging 62.9% year-on-year, driven by semiconductors and computer equipment. Singapore's total exports also grew by 49.3% in June, and Malaysia's second-quarter GDP growth accelerated to 5.8%, supported by a strong manufacturing sector. Vietnam's nominal goods exports rose 25% year-on-year in July, driven by a 3% monthly expansion in the electronics sector, demonstrating the powerful spillover effects of the AI tech cycle.

Hidden risks and a fragile tipping point

Despite the positive outlook, there are significant downside risks from excessive concentration. AMRO warns that if global AI investment growth slows back to 2024 levels, the ASEAN+3 region's economic growth could sharply decelerate to 2.5% by 2027, its weakest performance since the 1997 Asian financial crisis, excluding the pandemic period. The IMF has modelled a scenario where AI fails to meet expectations, leading to a sharp drop in tech capital spending and a broad-based asset price correction, which could result in a net loss of approximately 1.2% of global output over the next two years. From a market structure perspective, the semiconductor industry group now accounts for 19% of the S&P 500 index, the highest weighting for any single sector or industry group on record. From a credit cycle perspective, total corporate debt issuance has surged 125% from the low point following the 2023 Silicon Valley Bank crisis, indicating the credit cycle is in its late middle stages. While investment-grade spreads remain tight, the relative performance of technology sector debt is near its lowest level since 2001, and credit spreads are showing a moderate upward trend, warranting close attention to weaker links in the credit market.