AI spending is boosting the economy, but many businesses are in survival mode (www.cnbc.com)

The AI boom is materially lifting markets and GDP even as much of the rest of the economy struggles. Heavy capital expenditures on AI infrastructure—led by firms like Nvidia, Microsoft, Alphabet, Broadcom and others—helped contribute roughly 1.1 percentage points to U.S. GDP growth in H1 2025 (JPMorgan), and have driven the S&P 500 and Nasdaq to record highs (up ~15% and ~20% YTD). Eight AI-tied tech giants now account for about 37% of the S&P; Nvidia alone is worth roughly $4.5 trillion and has committed major investments (including a reported $100 billion to OpenAI to deploy ~10 GW of systems). Investors are front-loading spending on chips, data center hardware and software platforms, and quarterly guidance on capex will be closely watched. That top-line strength masks widespread strain: small businesses and consumer-facing sectors face higher tariff-driven input costs, weak consumer sentiment, contracting manufacturing, flat construction spending and declining hiring. Tariffs are estimated to add over $1.2 trillion in costs this year (S&P Global), and one in four small firms report being in “survival mode.” Experts warn the AI lift is concentrated in infrastructure and productivity gains won’t be immediate—AI deployments require changes to people, processes and culture—so macro indicators could remain uneven even as AI spending powers markets and GDP.