Bi-Weekly Geopolitical Report – The AI Buildout: Profits, Productivity, and the Risk of Overcapacity (October 12, 2026)
by Thomas Wash | PDF
Famed investor Charlie Munger once said that “the great lesson in microeconomics is to discriminate between when technology is going to help you and when it is going to kill you,” adding that most people do not get this straight in their heads. That lesson is especially relevant today.
Investment related to artificial intelligence (AI) has dominated the United States economy in 2026. At an estimated $1 trillion, AI-related capital expenditure not only exceeds any prior investment cycle in nominal terms as well as any since the railroad boom as a share of gross domestic product, but it also surpasses the annual GDP of most countries. To fund this spending, companies have relied on a combination of debt, equity, and their own cash reserves as they race to dominate the sector in what is shaping up to be one of the largest bets in economic history.