2 under-the-radar indicators are signaling that the AI-capex boom could soon fade

Jim Paulsen, former chief investment strategist at the Leuthold Group, warns that surging oil prices and rising bond yields, along with underperforming AI stocks and a sharp decline in US core capital goods orders, signal a potential slowdown in AI capital spending that could impact the US economy and stock market. Paulsen notes that if core capital spending declines or trends sideways in the coming six months, it would force a major readjustment for investors who have embraced the AI spending story.

2 under-the-radar indicators are signaling that the AI-capex boom could soon fade Business Insider https://www.businessinsider.com Market veteran Jim Paulsen says surging oil prices and rising bond yields are among the forces that could slow spending. - Jim Paulsen warns of potential slowdown in AI capex spending, which could impact the US economy and stock market. - Surging oil prices and rising bond yields are among the forces that could slow spending. - Paulsen lays out two potentially overlooked indicators that are signaling a spending slowdown. Capital spending has buoyed the AI trade for months as companies continue to pledge tens of billions of dollars towards it. But Jim Paulsen https://www.businessinsider.com/stock-market-sp500-economic-warning-private-gdp-jim-paulsen-2026-6 , former chief investment strategist at the Leuthold Group and current Substack scribe https://paulsenperspectives.substack.com/p/capital-spending-and-the-stock-market , sees two market trends signaling bumps in the road ahead. The first indicator is the recent underperformance of AI stocks, which he says is a warning sign that investors are already bracing for weaker spending growth. The second — as indicated by the red line in the chart below — is a sharp recent decline in US core capital goods orders. As oil prices https://www.businessinsider.com/oil-prices-today-brent-wti-crude-supply-shortage-iran-war-2026-7 , bond yields and the US dollar have surged, Paulsen says investors have already been pricing in a core-capital-spending slowdown. "Should US core capital spending decline in the coming six months or even simply trend sideways, this would force a major readjustment in the mindsets of many investors who have embraced the AI spending story," he added. AI capex has been top of mind for Wall Street analysts recently as second-quarter earnings reports have rolled in, revealing that many big tech leaders plan to https://www.businessinsider.com/big-tech-spending-capex-earnings-season-memory-prices-ai-2026-7 keep ramping up spending. The market's response, which sent stocks such as Alphabet https://markets.businessinsider.com/stocks/googl-stock , Tesla https://markets.businessinsider.com/stocks/tsla-stock and Meta https://markets.businessinsider.com/stocks/meta-stock into post-earnings plunges https://www.businessinsider.com/tesla-alphabet-stock-price-q2-earnings-capex-ai-spending-tsla-2026-7 , makes it clear that investors want to see a return on these already massive investments. Business Insider https://www.businessinsider.com/jim-paulsen-wall-street-ai-capex-boom-earnings-stocks-economy-2026-7 Get AI news in your inbox Daily digest of what matters in AI.