The FOBO-Driven AI Capex Surge: A Survival-Based Growth Cycle for Investors

The artificial intelligence (AI) revolution is no longer a speculative narrative but a survival imperative. Corporations and governments are accelerating AI capital expenditures (capex) not out of optimism but out of fear of obsolescence-a phenomenon JPMorgan has dubbed the "FOBO effect." This fear is reshaping global economic dynamics, creating a unique growth cycle driven by necessity rather than hype. For investors, the implications are profound: a sustained capex boom is unlocking underestimated monetization opportunities, particularly in AI infrastructure and scalable adopters.

The FOBO-Driven Capex Surge: A New Engine of Growth

In 2025, AI-related capex contributed 1.1% to U.S. GDP growth, outpacing traditional drivers like consumer spending. This surge is not confined to a few sectors but spans industries from manufacturing to healthcare. JPMorgan attributes this to a "survival-based" mindset: companies are investing aggressively to avoid falling behind competitors, even if the immediate returns are uncertain. The hyperscalers-Meta, Alphabet, Microsoft, and Amazon-are leading the charge, with projected 2025 AI capex of $342 billion, a 62% year-on-year increase.

This spending is not merely a short-term spike. JPMorgan forecasts that AI capex by tech giants will surpass $500 billion annually by 2026, fueled by a "supercycle" of innovation and infrastructure demand. The scale of investment suggests a structural shift, as firms recognize that AI is no longer a competitive advantage but a baseline requirement for relevance.

The Decoupling of Capex and Labor: A Cautionary Signal

Despite the capex boom, JPMorgan has identified a troubling divergence: hiring has weakened significantly, raising questions about the sustainability of current economic momentum. This "odd decouple" between investment and labor market dynamics signals a potential risk. If companies are prioritizing automation over human capital, the broader economy could face imbalances. However, this also highlights the efficiency gains embedded in AI adoption. Productivity improvements-projected to reach 30% in AI-impacted sectors by 2026-may offset labor constraints, creating a new equilibrium where growth is driven by capital rather than labor.

Bottlenecks and the Infrastructure Bottleneck

The AI supercycle is not without its constraints. JPMorgan identifies semiconductors and energy infrastructure as critical bottlenecks. Advanced chips, such as Nvidia's Blackwell, are already sold out through 2026, while AI's energy demands are projected to require an additional 662 terawatt hours (TWh) of U.S. electricity by 2030. These challenges underscore the importance of investing in the physical supply chain. Firms like Vistra and IREN, which specialize in power solutions for data centers, are positioned to benefit from this demand. For investors, the lesson is clear: infrastructure is the unsung hero of the AI revolution.

Monetization: From Hype to Discipline

The transition from speculative spending to disciplined monetization is accelerating. While 40% of CEOs anticipated revenue growth from generative AI in 2025, only a third reported significant gains by year-end. This gap has forced CFOs to scrutinize return on investment (ROI), favoring projects with clear financial outcomes. JPMorgan notes a shift toward valuation frameworks like the Rule of 40-a metric combining growth and profitability-which prioritizes sustainable returns over rapid scaling.

This evolution is particularly relevant for private markets. JPMorgan's 2026 Global Alternatives Outlook highlights AI's role in extending the lifespan of private companies, as firms delay IPOs until they achieve monetization milestones. For public investors, this means the next wave of AI-driven value creation will likely emerge from companies that can scale infrastructure efficiently while navigating energy and computational constraints.

Strategic Investment Opportunities

The FOBO-driven capex surge creates a compelling case for strategic investments in two areas:
1. AI Infrastructure: Firms supplying semiconductors, energy solutions, and data-center infrastructure are essential to the AI supercycle. JPMorgan emphasizes that these layers must scale before broader monetization can take hold.
2. Monetizing AI Adopters: Large-cap companies across industries-such as healthcare providers, logistics firms, and financial institutions-are leveraging AI to drive productivity and profitability. These adopters are expected to generate outsized returns as infrastructure bottlenecks ease.

Conclusion: A Survival-Based Growth Cycle

The FOBO-driven AI capex surge is redefining economic growth. Unlike previous tech booms, this cycle is not fueled by speculative hype but by the urgent need to avoid obsolescence. For investors, the key is to align with the structural trends: infrastructure scalability and disciplined monetization. As JPMorgan warns, the next phase of AI's economic impact will hinge on overcoming bottlenecks and delivering tangible returns. Those who recognize this shift early stand to benefit from a growth cycle driven not by optimism, but by necessity.