Katrina Dudley, Senior Investment Strategist at Franklin Templeton, said the bull case for AI infrastructure spending is winning out over the bear arguments, and expects the investment theme to remain durable through 2027 and potentially into 2028.
AI Infrastructure Outlook · Franklin Templeton
The AI Build-Out Bull Case Wins — And It Runs Through 2028
Strategist Katrina Dudley says structural demand for data centers, compute and power is prevailing over ROI skeptics. She calls the current volatility "early-cycle noise" in what she frames as a decade-long spending cycle.
$660–690B
Combined 2026 AI CapEx from the top five hyperscalers
$765B
Projected annual AI-related CapEx in 2026
$7.6T
Cumulative 2026–2031 AI CapEx forecast
Expected 2026 AI-Related CapEx
Column height scaled to dollar value
The Long Ramp: 2026 → 2031
Goldman Sachs projects annual AI CapEx more than doubling
Roughly 2× growth — the early stage of what Dudley calls a decade-long cycle.
Bull Case (Winning)
Structural demand for compute, power and data centers is durable — "at least here through 2026, 2027 and even well into 2028." Share swings are "early-cycle noise."
Bear Case
Returns have yet to justify the outlays. Wall Street is wary of near-term monetization and short-term overcapacity concerns.
By 2030: McKinsey estimates AI data center infrastructure demand reaching $5.2T across 156GW of capacity — while Dell'Oro sees global data center CapEx topping $1T as soon as 2026. Semiconductor and data center stocks face near-term volatility, but the long-term demand case remains firmly in place.
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