AI Spending Drives Business Equipment Investment to 6-Year High

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The boom in artificial intelligence products and infrastructure led to a significant increase in business investment, driving a closely watched measure of business spending to a six-year high in March.
New orders for nondefense capital goods, excluding aircraft, rose by 3.3% in March, up from 1.6% in February, according to the Census Bureau. This metric is crucial for gauging business investment.
The increase in core capital goods orders for March was above expectations, with economists predicting a 0.5% rise.
The surge in business spending for equipment is attributed to heavy investments in AI technologies and the data centers that support them.
There’s a speculation that businesses may be purchasing equipment preemptively due to concerns over potential price hikes or shortages resulting from tensions with Iran.
Experts highlight that the strength in business investment could indicate the release of previously stifled business development efforts due to policy uncertainty.
Economist projections suggest this trend will continue through 2026 due to ongoing AI spending and favorable tax provisions.

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