BlackRock says AI remains in early build-out phase

BlackRock Inc. Global Chief Investment Strategist Wei Li said artificial intelligence is still in the first of three stages — build-out, adoption and broader productivity gains — in an S&P Global interview on Monday, even as Amazon.com Inc., Alphabet Inc. and Microsoft Corp. plan nearly $600 billion in combined capital spending this year.

Li said the clearest sign of that "massive build-out" phase is that the biggest spenders still say capacity is lagging demand. Amazon, Alphabet and Microsoft are on track to spend roughly $590 billion to $600 billion on capital expenditures this year, much of it tied to data centers and AI infrastructure. Amazon raised its 2026 capex forecast to about $220 billion, but CEO Andy Jassy has said even that may not provide enough capacity to meet demand. Alphabet lifted its forecast to $195 billion to $205 billion and said demand continues to exceed available computing capacity.

Microsoft expects about $175. OpenAI and Microsoft are adding billions of calendar-year 2026 capex, with CFO Amy Hood saying customer demand “continues to exceed available capacity.” Nvidia (NASDAQ: NVDA ) is already capturing much of that build-out. Its data-center revenue rose 117% to $89 billion last quarter, and its Vera Rubin platform is ramping at Google Cloud and Microsoft Azure. CEO Jensen Huang said AI demand is “accelerating.” Asked whether AI is a productivity revolution or a bubble, Li said: “It can be both.” For now, she doesn’t think it’s a bubble.

Li said tech valuations are not particularly stretched even as companies increase capex and “doubling down” on AI because they are still doing the “heavy lifting in earnings delivery.” Prediction market traders are not heavily betting on an imminent collapse either. Polymarket puts an AI industry downturn by Dec. 31 at roughly a 9% chance, with about $2.35 million in volume on that contract. The bar is high.

At least three severe events must occur within 90 days, including possibilities such as Nvidia falling 50% from its all-time high, the SOXX semiconductor ETF falling 40%, or OpenAI or Anthropic declaring bankruptcy. Li’s Li said concerns are less dramatic, warning that narratives can get ahead of actual revenue creation and adoption. She said BlackRock already uses outside LLMs and its own tools, including Asimov, an internal investment platform, and is looking to integrate AI into every step of its day-to-day. Li added that while BlackRock sees productivity gains in some companies and sectors, the broader economy has yet to see meaningful progress.

Despite the hundreds of billions already being spent, Li said AI remains in the build-out phase, with broader adoption and productivity gains still ahead.