Big Tech's $635 billion AI spending faces energy shock test, S&P Global says

Massive AI-driven investments that fueled record equity gains now face a major hurdle as the Middle East crisis clouds growth prospects and raises energy costs, according to Melissa Otto, head of research at S&P Global Visible Alpha. The development could pressure equity multiples and slow earnings growth by increasing energy-related costs and adding geopolitical risk premia. Investors may shift toward more risk-off positioning and reassess sector exposures sensitive to energy prices and growth assumptions.

Analysis

Massive AI-driven investments that fueled record equity gains now face a major hurdle as the Middle East crisis clouds growth prospects and raises energy costs, according to Melissa Otto, head of research at S&P Global Visible Alpha. The development could pressure equity multiples and slow earnings growth by increasing energy-related costs and adding geopolitical risk premia. Investors may shift toward more risk-off positioning and reassess sector exposures sensitive to energy prices and growth assumptions.