Gensler Warns AI Trade May Not Last as Infrastructure Spending Plateaus

Former SEC Chair Gary Gensler has expressed skepticism about the AI trade's sustainability. In an interview, he stated that the current infrastructure buildout will eventually plateau and reverse.

The scale of AI-related capital expenditure is staggering, with $795 billion expected in 2026 and $1 trillion in 2027. Major hyperscalers like Alphabet Inc.'s Google (GOOG, GOOGL), Amazon (AMZN), Microsoft (MSFT), Meta (META), and Oracle (ORCL) are estimated to spend about $795 billion on capital expenditures this year.

Gensler also pointed out that memory companies are highly cyclical and will eventually lose pricing power as shortages ease. He expects the markets to reprice if these companies fail to beat earnings estimates or flatline.