Here’s the thing about Wall Street: it’s really good at looking backward while pretending to look forward. And nowhere is that more obvious than how the market is treating AI right now.
James Thorne, chief market strategist at Wellington Altus, just called out the elephant in the room: investors are using “valuation models from the wrong century for the wrong game.” Translation? Everyone’s freaking out about AI spending like it’s 1999 and we’re about to hit a recession, when actually we’re in the middle of an economic mobilization that hasn’t happened since… well, since nations geared up for geopolitical conflicts.
Let’s break down what’s actually happening. Tech stocks are getting hammered because Wall Street convinced itself that high growth + high spending = inflation = bad. So money’s flooding into utilities and staples trading at 50 times earnings (yes, you read that right), while AI and software companies are being sold off like they’re going out of style. It’s the financial equivalent of panic-selling your growth stocks to buy bonds yielding nothing.
The problem? That playbook is ancient. It assumes the economy works the way it did in the 2000s, when capex spending was just… spending. But AI capex isn’t just companies throwing money at shiny new toys. It’s the US essentially saying, “We need to stay competitive globally, and that requires infrastructure.” Think of it like the interstate highway system or the space race—massive upfront investment that reshapes the entire economy.
Thorne’s point is that we should stop asking “Are companies overspending on AI?” and start asking “What is this spending actually building?” Because here’s the uncomfortable truth: the capex levels aren’t just justified—they’re necessary. The debt concerns everyone’s worried about? Maybe the real question isn’t “Is there too much debt?” but “Is the debt going toward something that’ll actually pay off?”
Markets are supposed to price the future, but they’re terrible at it when the future looks different from the past. They try to squeeze new paradigms into old templates, and that’s exactly what’s happening with AI. Wall Street sees high spending and thinks “late-cycle boom heading for a crash.” But what if it’s actually the beginning of a new economic era?
The rotation away from high-growth tech stocks might feel smart right now—utilities are boring and safe, after all. But boring and safe don’t build the infrastructure that keeps America competitive. And when you’re in the middle of a genuine economic regime shift, boring and safe is usually the worst place to be.
So while everyone else is panic-selling their tech holdings to chase dividend yields, the real question might be: who’s going to own the future? Because spoiler alert—it’s probably not the utilities trading at 50x earnings.