Industrial sectors globally express growing optimism
In the current economic landscape, U.S. capital spending presents a mixed picture of growth and decline. While overall capital expenditure is projected to contract by approximately 5% in the second half of 2025, there is significant growth occurring in technology-related investments, particularly in AI and data center infrastructure.
Despite the general slowdown, major U.S. tech firms are dramatically increasing capital expenditures. Alphabet, for instance, now expects to spend $85 billion on capital expenditures in 2025, an increase of $10 billion from earlier forecasts. Meta and Microsoft are also planning for significant capex growth to support AI capacity expansions and cloud business growth, respectively.
Large-scale investments are also ongoing in semiconductor and AI infrastructure manufacturing. Companies like Apple, NVIDIA, Micron Technology, and IBM have announced multibillion-dollar investments in U.S. manufacturing and growth.
However, proposed tariffs and trade policies could increase input costs for businesses and consumers, potentially dampening industrial growth despite these investments. The uncertainty from tariffs and geopolitical tensions likely contributes to cautious capital spending outside tech.
The U.S. economy is expected to grow moderately, with stable but above-target inflation, supported by business investment and consumer spending, but restrained by supply chain and tariff challenges.
In the industrial sector, Nucor Corporation's steel mill backlog has seen a significant increase, up nearly 30% from a year ago, and its backlog for sheet metal products is 15% higher year over year. Executives at Nucor expect second-half demand to be stronger than last year, with orders for data center beams up significantly.
Olympic Steel Inc.'s executives see momentum building in two of its divisions, specifically in pipes and tubes destined for data centers and in stainless and aluminum products. The combination of bonus depreciation and lowered interest rates is expected to be a "powerful boost to demand" for Olympic Steel.
Caterpillar Inc., another industrial giant, is also experiencing growth. Its CFO, Andrew Bonfield, expects second-half sales to grow more than they typically do for the company. Caterpillar's orders and backlog have grown, with CEO Joe Creed expressing increasing optimism about top-line expectations.
However, the manufacturing sector is experiencing a slowdown, as indicated by the ISM Manufacturing PMI contracting at a faster rate in July. The article does not provide new information about manufacturers' readiness for increased production.
In conclusion, U.S. capital spending is contracting overall but remains robust and even accelerating in technology sectors related to AI and data centers, driven by massive corporate investments. Tariffs and trade tensions add uncertainty and cost pressures that likely slow broader industrial growth and infrastructure spending outside these leading tech investments.
Businesses in the finance sector, particularly tech giants like Alphabet, Meta, and Microsoft, are investing heavily in capital expenditures to support the growth of their AI capacity and cloud businesses. Simultaneously, the industrial sector, such as Nucor Corporation and Caterpillar Inc., are also experiencing growth, with Nucor's steel mill backlog significantly increasing and Caterpillar's executives expressing optimism about top-line expectations.
