Mag 7 Plans to ‘FOMO’ Into $650B Tech Investment Despite Trump’s U.S. Manufacturing Push

Despite President Trump’s tariff policies aiming to boost domestic manufacturing, corporate investment in the US overwhelmingly favors technology (“bits”) over traditional infrastructure (“bricks and mortar”). This is clearly demonstrated by the “Magnificent Seven” tech giants (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla), projected to spend a combined $650 billion this year on capital expenditure (capex) and research and development (R&D). This surpasses the UK’s total annual public investment.

This tech-focused spending is further highlighted by the surge in investment in IT equipment and software, currently accounting for 6.1% of the US GDP. Conversely, private fixed and non-residential investment (excluding IT) has declined for three consecutive quarters.

Lloyds Bank’s FX Strategist, Nicholas Kennedy, attributes this sectoral imbalance partly to the “fear of missing out” (FOMO) on the burgeoning AI sector. Companies are redirecting resources from traditional investments toward AI-related projects, even if the ultimate return on investment remains uncertain. Other contributing factors include the waning impact of the CHIPS Act’s building boom and ongoing political/trade uncertainties.

US corporate spending on IT equipment and software has reached $1.45 trillion, a 13.6% year-over-year increase, constituting over 40% of total US private fixed investment. Second-quarter GDP data shows a 12.4% quarter-on-quarter increase in IT investment, contrasting sharply with a 4.9% decline in non-IT sectors.

This “bits” dominance alleviates concerns that the administration’s manufacturing focus will detract from technology markets, including cryptocurrencies. The correlation between the rise of AI (exemplified by Nvidia’s stock performance) and the cryptocurrency market is evident, with both experiencing significant growth since late 2022.

Furthermore, the cryptocurrency market benefits from a pro-crypto regulatory environment under the Trump administration. Legislation aimed at clarifying digital asset and stablecoin regulations, coupled with strategic appointments to financial regulatory bodies, indicates a supportive stance. This bipartisan support underscores the administration’s commitment to fostering a favorable regulatory landscape for the crypto industry.