Franklin Templeton dismisses skepticism on AI capital expenditures, calls spending cycle ‘early innings’

Wall Street has a recurring habit of declaring tech spending bubbles right before the spending accelerates. Franklin Templeton’s head market strategist just told the doubters to sit down. Chris Galipeau, Head Market Strategist at Franklin Templeton Institute, used the firm’s “Talking Markets” podcast on July 21 to deliver an unambiguous message: AI capital expenditures are “real and ongoing,” not a rumor, not a hype cycle, and certainly not slowing down. His core data point is hard to argue with. The top five hyperscalers spent just over $100 billion in CapEx back in 2023. That figure is projected to exceed $700 billion in 2026. That’s roughly a 7x increase in three years. For context, $700 billion is larger than the entire GDP of Switzerland. The numbers behind the confidence Galipeau’s argument rests on a straightforward thesis: the money flowing into AI infrastructure is generating measurable earnings growth, not just impressive press releases. He forecasts that the S&P 500 could achieve over 20% year-over-year earnings growth in the second quarter of 2026. Two primary drivers sit behind that projection: AI-related spending filtering into corporate bottom lines, and improvin...