Episode summary
Wall Street Strikes Back | Animal Spirits 424
Animal Spirits
· · Hosts: Michael Batnick, Ben Carlson
Summary
AI spending became the week’s dominant market narrative because the hyperscalers’ capex is now large enough to matter for GDP, earnings, and investor sentiment. The discussion argued that Microsoft, Alphabet, Amazon, Meta, and Oracle are committing extraordinary sums, with one estimate putting their combined spending at $320 billion this year, and that AI-related capex has added more to GDP growth than consumer spending so far in 2025. That does not mean AI is bigger than the consumer, but it does mean the market is increasingly dependent on a handful of companies’ infrastructure bets.
Key takeaways
- The hyperscalers’ AI and data-center spending is now so large that it is influencing GDP growth more than consumer spending, according to the hosts’ cited charts.
- The market may be “saved” by AI spend today, but the hosts think the historical playbook still points to overspending, lower expectations, and a possible tech washout later.
- Retail trading is back in force: CME saw more than 90,000 first-time futures traders in the quarter, and Robinhood posted a record $265 million in options revenue.
- Housing is softening unevenly, with about half of U.S. cities seeing falling prices and condos weakening faster than single-family homes, especially in Florida.
- The labor-market data look weaker after large payroll revisions, but the hosts argued the slowdown may still be normalization rather than crisis.
Notable quotes
“AI capex, which we define as information processing equipment plus software, has added more to GDP growth than consumer spending”
“The question now is like um can we have a softening economy, a weakening consumer uh without a commensurate softening in the stock market”
“There are always people there are always industries and people struggling and they are in the business of getting subscribers and getting people to click”
“the condo market is floundering. Four charts that explain the downturn”
How the episode opens
Today's Animal Spirits is brought to you by Y Charts. It's that time of the year where we talk about how fast the summer went. I can't believe it.
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Yeah. So, if you want to sharpen your midyear strategy, have better conversations with clients, download the deck with a link in the show notes. And remember, if you want 20% off of that initial professional subscription, tell them spirits sent you.
Check out ycharts.com to learn more. Welcome to Animal Spirits with Michael and Ben. It is the first week of August.
This is usually the time of the year when everything slows down. And it seems to not be happening uh at all this year um for our business at Red Hold Management, which is a reflection of the economy in the stock market. Obviously, the stock market itself uh has been interesting to say the least over the last week.
Uh we're still manufacturing. Uh I know manufacturing is down, but not with our merchandise.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai market rally
- capex bubbles
- carvana comeback
- labor market debate
- real estate downturn
Watch the episode
Watch “Wall Street Strikes Back | Animal Spirits 424” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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