The first week of February was a tumultuous period in markets. Anthropic, one of the more vocal companies in the artificial intelligence realm, jolted stocks with the apparent superpowers of its Claude chatbot, triggering a selloff in the software sector as the specter of potential obsolescence loomed large.
Marta Norton, chief investment strategist at Empower Investments, told Axios that it brought to mind the displacement of BlackBerry when iPhones redefined the appearance and feel of smartphones. Technically, the company endured, yet BlackBerry stock has plummeted 98% since 2008.
Bloomberg calculated that [something] evaporated within a week. Still, one of Wall Street’s leading figures perceives a vastly different picture for the overall economy: a boom.
As investors worry about volatility in the tech sector and the possibility of an AI bubble bursting, Torsten Slok, chief economist at [company], urged investors to disregard the noise. He contended in his widely circulated [report] that concerns regarding the software industry are unlikely to pull down the broader economy.
In a research note released on Feb. 8, Slok predicted, “The issues in software will not become a macro problem because the underlying U.S. economy is on the cusp of taking off.”
The three pillars of growth
He identified three robust tailwinds set to drive growth in the coming quarters, shifting the economic narrative from digital volatility to physical expansion.
First, the infrastructure foundation for the AI revolution has already been funded. Slok noted that “numerous financings for data centers have already been secured for 2026.” This implies that despite short-term stock swings in software firms, the capital expenditure on the physical hardware and facilities needed to operate them is locked in, establishing a base for economic activity.
[Companies like X, Y, and Z] surprised investors with a combined $660 billion in capital expenditure plans for 2026 in their most recent earnings disclosures. [Company] projects AI capital expenditure will quadruple to $1.2 trillion by 2030, indicating this will be a stable aspect of the economy.
Second, the reindustrialization of the United States is gathering pace, with “strong political backing for bringing back production facilities for semiconductors, pharmaceuticals, and defense,” he explained. This reshoring endeavor represents a structural transformation in the economy, redirecting investment toward tangible manufacturing assets that are less at the mercy of the volatile sentiment that typically influences tech stocks.
And third, the government is maintaining an expansionary fiscal policy. Quoting data from the Congressional Budget Office (CBO), Slok highlighted that government spending is expected to boost GDP growth this year by 0.9 percentage points.
A dangerous pivot?
This anticipated surge in economic activity leads Slok to a conclusion that could startle investors seeking relief from the Federal Reserve. “The bottom line is that it’s extremely hard to be pessimistic about the U.S. economic outlook,” he penned.
Just one day prior, [someone] stated that public markets are a “diminishing component” of the U.S. economy, presenting a body of evidence that strongly indicates people overreact to movements in equities like the $1 trillion software selloff.
“Most of the time in financial markets is devoted to discussing [certain things], but these firms and the rest of the S&P 500 companies account for only a very small fraction of the U.S. economy,” he wrote, noting that employment in S&P 500 companies is just 18% of the economy’s total, while capital expenditure by S&P 500 companies is only 21% of the total.
Privately owned companies account for nearly 80% of job openings, and 81% of firms with revenues exceeding $100 million are private, he added.
However, a thriving economy will bring its own set of challenges, according to Slok. While the market’s current preoccupation is forecasting when the Fed will lower rates, he cautioned that “later this year, the conversation in markets will shift from discussing Fed cuts to instead talking about the Fed needing to raise rates.”
This forecast implies the U.S. economy may be teetering on the brink of overheating. If growth speeds up as Slok anticipates—fueled by data center construction, a manufacturing revival, and fiscal stimulus—inflationary pressures could compel the central bank to tighten monetary policy rather than ease it.
For investors, the risk isn’t that the AI sector will decimate the stock market. The actual story is that the “old economy”—construction, defense, and manufacturing—is making a strong comeback, potentially necessitating a complete rethinking of interest rate expectations for 2026.