TOKYO, March 31 - Massive planned outlays for artificial intelligence infrastructure that have supported recent equity gains are now vulnerable to an energy shock, according to Melissa Otto, head of research at S&P Global Visible Alpha. Otto said the Middle East crisis has clouded the outlook for growth and for the cost of energy, placing pressure on the sector's spending plans.
Before the outbreak of conflict in Iran, the largest U.S. tech companies - Microsoft, Amazon, Alphabet and Meta - were expected to commit about $635 billion in 2026 toward data centres, semiconductor capacity and other AI-related capital projects, S&P Global reported. That anticipated total represented a marked acceleration from $383 billion the year before and a steep rise from roughly $80 billion in 2019.
Although those technology firms have not formally announced cuts to their projected capital expenditure programs, Otto warned that a prolonged period of elevated oil prices could force revisions to planned spending during the first and second quarters. She said such adjustments could act as a catalyst for what she described as "a really meaningful correction in all equity markets."
"I think if the capex numbers get pulled back, if in fact energy prices are not reflected in earnings, that could be a catalyst," Otto said in an interview in Tokyo on Monday. Her comments underline the potential for energy costs to feed through to investment plans and corporate earnings.
Investor enthusiasm for AI has pushed global stock indexes past their 2025 peaks, fueled by expectations that the trend would sustain further gains. That momentum has eased since the onset of the conflict, however, while energy costs have become a more visible constraint on expansion.
Data centres, the backbone of many AI services, consume large amounts of electricity. As a result, the economics of scaling AI are sensitive to both power prices and the availability of energy infrastructure. At the CERAWeek energy conference in Houston last week, Otto said oil industry executives cautioned that supply risks were not fully priced into markets, adding to concerns about potential further price increases and their knock-on effects for the world economy.
"We’re seeing this big question around global growth," Otto said. "Because if you have energy prices jumping 30%, that’s going to hurt consumers, that’s going to hurt companies." Those remarks highlighted the transmission channel from energy markets to consumer purchasing power, corporate profit margins and ultimately investment plans.
The analysis also touched on equity-market implications: if companies begin to pare back capital expenditures in response to rising energy costs, the resulting downward revisions to growth expectations and earnings could prompt broad market corrections, Otto warned.
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