AI Capex in Mid-Cycle Boom, Says Morgan Stanley’s Shalett

Major technology companies are investing a combined $750 billion into artificial intelligence this year, relying on their core advertising and retail divisions to fund these efforts. However, those primary revenue sources are now exhibiting signs of deceleration, with some businesses facing internal competition from the new AI tools themselves. This dynamic creates a financial tension, as the long-term profitability of these massive capital expenditures remains unproven while the traditional engines of growth begin to stall.