US Growth Outpaces Europe as AI Capex Hits $700 Billion, But Wall Street Is Watching for a Bubble

The International Monetary Fund's latest projections put US growth at 2.3% for 2026 and 2.2% for 2027. Europe doesn't come close. Germany is projected at just 0.7% growth this year, France at 0.6%, and Europe overall at 0.9%, according to the IMF figures cited by Breitbart.

One factor behind the gap is energy. The US is a net energy exporter, and Breitbart's Business Digest argues that gives the American economy a cushion Europe doesn't have, since higher energy prices act as a drag when you're importing rather than producing. Europe has leaned harder into climate policy and imported natural gas even as it sits on its own extraction potential.

The bigger factor, though, is artificial intelligence. A working paper by economists Bick and colleagues, summarized by the research site Innovative Human Capital, surveyed roughly 55,000 workers across the US, Germany, UK, France, Italy, Netherlands, and Sweden. As of early 2026, 43% of US workers report using generative AI on the job. That beats every European country surveyed, from 26% in Italy to 36% in the UK. American workers who do use AI also use it more intensively, spending about 5.2% of total work hours on it compared to 1.0% to 1.8% in Europe. The gap widened between mid-2025 and early 2026, with US adoption climbing 3.6 percentage points, the largest jump of any country surveyed.

That adoption gap tracks a pattern going back three decades. US labor productivity grew 85% between 1995 and 2025 versus 29% in Europe, a divergence researchers have tied to how aggressively American firms invested in information technology compared to their European counterparts, according to the same research summary.

None of this is happening on the cheap. Capital expenditure on AI infrastructure, meaning data centers, chips, and power systems, jumped from $235 billion in 2024 to a projected $700 billion-plus in 2026, according to figures reported by the Epoch Times. Goldman Sachs projects that figure could hit $4 trillion to $8 trillion over the next five years. JPMorgan puts the number above $5 trillion by 2030.

AI-related companies now account for roughly three-quarters of the S&P 500's gains over the past year and about 80% of the index's earnings growth, according to JPMorgan Asset Management research cited by the Epoch Times. JPMorgan projects AI companies will generate roughly a third of total S&P 500 net income in 2026.

The Bubble Question

Wall Street's own money managers are getting nervous about the pace of AI spending outrunning the ability to turn a profit on it. Nvidia, now valued at $5 trillion according to CNN, recently arranged $500 billion in financing from Apollo, BlackRock, Goldman Sachs, and other firms to help customers buy its chips.

This arrangement, known as circular financing, echoes the dot-com era, when telecom equipment makers lent money to their own customers so those customers could buy more equipment. Max Gokhman, head of AI and digital asset solutions at Franklin Templeton, told CNN "circular financing will end badly," while also saying he doesn't think leverage has reached alarming levels yet and remains a believer in the AI buildout long-term.

Peter Earle, senior economist at the American Institute for Economic Research, offered a similar two-sided read to the Epoch Times. He said history is full of cases where transformational technologies attract more investment than they can profitably absorb in the short run, and that investors typically underestimate how long it takes for new technology to diffuse and generate real productivity gains before assuming it's a bust.

Both concerns deserve to be taken seriously rather than dismissed as either blind optimism or reflexive doom-saying. The bull case, that AI is a genuine general-purpose technology following the same adoption curve that made American workers more productive than European workers for thirty years, has real data behind it in the Bick survey. The bear case, that hundreds of billions in circular financing arrangements are inflating a bubble that bursts once Wall Street's patience runs out, also has real data behind it in the scale of the Nvidia financing deal and the concentration of S&P 500 gains in a handful of AI-exposed stocks.

Nobody in these sources, right or left-leaning, claims to know which version wins. What's measurable right now is the growth gap between the US and Europe, and the sheer size of the capital already committed. What's not yet measurable is whether that capital turns into durable earnings or into a write-down. The IMF's next set of projections, and whatever Nvidia's financing partners say about repayment terms if the AI capex cycle slows, will be the numbers to watch.