Franklin Templeton Bets on $700 Billion AI Spending Cycle

Franklin Templeton's Head Market Strategist Chris Galipeau recently made headlines by dismissing skepticism about AI capital expenditures, calling it an 'early innings' spending cycle. Speaking on the firm's 'Talking Markets' podcast, Galipeau emphasized that AI-related spending is 'real and ongoing,' generating measurable earnings growth for top hyperscalers.

The data point behind his confidence lies in the massive investment by the top five hyperscalers, who spent over $100 billion in capital expenditures (CapEx) in 2023. This figure is projected to exceed $700 billion in 2026, a staggering 7x increase in just three years.

Galipeau's thesis hinges on the idea that AI infrastructure spending is driving corporate earnings growth, rather than just generating hype. He forecasts that the S&P 500 could achieve over 20% year-over-year earnings growth in the second quarter of 2026, driven by AI-related spending and improving bank earnings.

Galipeau's commentary has implications for crypto markets, as strong equity earnings tend to correlate with investor confidence and risk appetite. If his projection materializes, it could lead to a broader risk-on signal for assets like cryptocurrencies.