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Macro Minute: Week of September 14, 2026

Written by Wes Johnson on . Posted in Macro Minute.

I have been listening and thinking about the AI CapEx cycle a lot lately. I am going to try and assimilate my thoughts here. There has been a mania taking place causing many market changes. First let’s talk about large cap tech. These companies grew in the aftermath of the dot.com bust. They were able to benefit from the huge CapEx cycle to build the modern internet. Then, in the aftermath of the great financial crisis they benefited because they were growing at a time when growth was scarce. Because of this they hoovered up fund flows. These companies have some commonalities. They were capital-lite, high-free cash flow companies. They have large stock compensation plans that they absorbed by having large buyback plans. As they have embarked upon this large CapEx cycle for AI and data centers, these conditions have changed. The free cash flow has dried up because it is being spent on CapEx, the buybacks are stopping, and they are having to issue large amounts of either debt or new shares. There is some creative financing going on too. This big spending is driving GDP growth higher and inflating profits in companies, especially semiconductors. This is happening at a time when most of these companies are priced for perfection. I won’t go into all the ways that this could go wrong, just know that there are many; however, I do want to highlight one thing. When prices are high, it doesn’t take much going wrong for the price to fall. The opposite is true, too. When prices are low, it doesn’t take much going right for prices to rise. This makes me think about what we see repeatedly over and over in history. Boom and bust cycles. Manias and overinvestment. Fear and Greed. 

What are some conclusions? There will be a time when this ends. It could happen for one of the innumerable reasons. Like I said, when things are priced high it doesn’t take much going wrong to have a correction in price. It could be OpenAI or Anthropic IPO’s disappointing, an over issuance of debt, investor appetite drying up, or an increase in competition. There are a lot of other ways it could end too. When it does, because this infrastructure buildout accounts for close to half of GDP growth, the U.S. will most likely have a recession. Tech stocks could go down a lot. The U.S. government may step in to fill the gap, expanding the fiscal deficit even wider. Because these companies have grown so large, they account for the majority of the index. If you buy the index expecting it to provide you with some protection from diversification, you may be badly mistaken.  

These are some investment conclusions I have: 

  • Investors may want to consider evaluating asset allocations to ensure they are not overly concentrated. 
  • If a recession occurs, bond yields could come down, especially if less corporate issuance ensues with the mania subsiding.  
  • This could give way to a more accommodating Federal Reserve. 
  • A looser Federal Reserve, along with widening deficits, has historically acted as a tailwind for gold prices, though past performance does not guarantee future results. 
  • Foreign investors may scale back on concentrated tech holdings. We witnessed a similar capital migration in early 2025, which temporarily favored international market returns. 
  • Since this could be a primarily U.S. problem and may result in foreign selling, the dollar should decline versus other currencies. 

I must say that I have no idea what will happen. These investments may turn out to be very profitable. I hope so, because the cost for them has been very high so far. I also don’t know the timing of any potential problems manifesting. I am just acknowledging this as a potential risk, and orienting portfolios accordingly. This is what I am always doing against any potential risk to the portfolios I manage. This approach has served clients well so far, and I hope it continues.  

DISCLOSURES:

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc. [“Longview Financial Advisors”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.