• The US continues to outpace other major economies, driven largely by massive capital expenditure in AI and solid consumer demand
  • The AI capex boom has led to dramatic gains and subsequent technical corrections in technology hardware and semiconductor stocks, particularly in Korea  
  • Europe’s performance lags the US while Japan shows a supportive macroeconomic backdrop with strong earnings, though it remains sensitive to potential strengthening of the yen 

By Daniel Morris, Chief Market Strategist

US exceptionalism was supposed to be last year’s theme. 2026 was all about balance and broadening of growth across countries. That vision has not quite played out. From an economic point of view, the US continues to outpace other major economies.

The huge gap in artificial intelligence capital expenditure in the US (estimated to be around $755 billion this year by Goldman Sachs) compared to China (around $100 billion) and Europe (approximately 5% of the US spend, according to Morgan Stanley) explains much of the difference.

The latest US GDP figures show a significant ongoing contribution to growth from business investment (partly offset by a net export drag due to semiconductor purchases from abroad), and solid consumer demand.

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