We will get a new estimate of Q3 U.S. GDP growth today. The consensus among analysts is for a rise of 3.2% year-on-year. That’s pretty decent growth. No wonder then, that the S&P 500 ticked up another 0.88% yesterday, to come within half a percentage point of its all-time high, and futures this morning are marginally up too. Traders seem to be pretty happy about where the U.S. economy is going.
But some analysts are starting to worry about how much of that growth is concentrated in AI.
A recent note from Pantheon Macroeconomics said that private fixed investment—a measure of how much companies are spending—”is rising only due to AI-related spending.” Analyst Oliver Allen published a chart this morning showing that all other private fixed investment is actually in decline:
“Capex intentions remain depressed, suggesting investment outside of AI-linked sectors remains weak,” he told clients in a note seen by Fortune.
Deutsche Bank said much the same thing in a recent note discussing whether AI was a bubble. “Investment in AI-related sectors is critical to GDP growth [and the] U.S. would be close to recession this year if it weren’t for tech-related spending, as other spending has flatlined post-Covid,” analysts Adrian Cox and Stefan Abrudan wrote.
The scale of capital expenditure (capex) investment going into AI is gargantuan. Bank of America’s Justin Post and Nitin Bansal estimate that AI capex from just five “hyperscalers” (Alphabet, Meta, Microsoft, Amazon, and Oracle) will total $399 billion this year and rise to over $600 billion in the years to come.
Increasingly, that AI capex will likely be funded by debt. The big tech companies have such healthy cashflow and robust balance sheets that it’s easy for most of them to add debt without harming their bottom lines, BofA says.
That debt is already breaking records. “Net supply [of new debt] from AI-related issuers in the USD credit market has crossed $200 billion in 2025, more than doubling last year’s total,” Spencer Rogers and his colleagues at Goldman Sachs told clients recently. “30% of USD credit net supply this year is AI-related.” He expects that number to go higher next year.
BofA says the companies are chasing $1 trillion in incremental revenues over the next five years. About $500 billion of that from cloud services; $400 billion in extra digital advertising spending; and $200 billion from AI subscriptions from both consumers and businesses.
“Historically (2021-24), each dollar of capex helped generate an average of $0.90 incremental revenue and $0.42 of incremental EBITDA in the following year,” they wrote.
Let’s hope they are right. Because according to Deutsche Bank, hyperscalers will spend a cumulative $4 trillion on AI data centers through 2030—more than the U.S. government’s moon-landing program in the 1960s: “10x [the] inflation-adjusted cost of Apollo programme with no guaranteed return.”
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
S&P 500 futures are up marginally this morning. The last session closed up 0.64%.
STOXX Europe 600 was up 0.18% in early trading.
The U.K.’s FTSE 100 was flat in early trading.
Japan’s Nikkei 225 was flat.
China’s CSI 300 was up 0.2%.
The South Korea KOSPI was up 0.28%.
India’s NIFTY 50 was flat.
Bitcoin sunk to $87K.
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While the world scrambles to adapt to the explosive demand for generative AI, Google Cloud CEO Thomas Kurian says his company isn’t reacting to a trend, but rather executing a strategy set in motion 10 years ago. In a recent panel for Fortune Brainstorm AI, Kurian detailed how Google anticipated the two biggest bottlenecks facing the industry today: the need for specialized silicon, and the looming scarcity of power.
According to Kurian, Google’s preparation began well before the current hype cycle. “We’ve worked on TPUs since 2014 … a long time before AI was fashionable,” Kurian said, referring to Google’s custom Tensor Processing Units. The decision to invest early was driven by a fundamental belief that chip architecture could be radically redesigned to accelerate machine learning.
The energy premonition
Perhaps more critical than the silicon itself was Google’s foresight regarding the physical constraints of computing. While much of the industry focused on speed, Google was calculating the electrical cost of that speed.
“We also knew that the most problematic thing that was going to happen was going to be energy because energy and data centers were going to become a bottleneck alongside chips,” Kurian said.
This prediction influenced the design of their infrastructure. Kurian said Google designed its machines “to be super efficient in delivering the maximum number of flops per unit of energy.” This efficiency is now a critical competitive advantage as AI adoption surges, placing unprecedented strain on global power grids.
Kurian said the energy challenge is more complex than simply finding more power, noting that not all energy sources are compatible with the specific demands of AI training. “If you’re running a cluster for training … the spike that you have with that computation draws so much energy that you can’t handle that from some forms of energy production,” he said.
To combat this, Google is pursuing a three-pronged strategy: diversifying energy sources, utilizing AI to manage thermodynamic exchanges within data centers, and developing fundamental technologies to create new forms of energy. In a moment of recursive innovation, Kurian said “the control systems that monitor the thermodynamics in our data centers are all governed by our AI platform.”
The ‘zero sum’ fallacy
Despite Google’s decade-long investment in its own silicon, Kurian pushed back against the narrative that the rise of custom chips threatens industry giants like Nvidia. He argues that the press often frames the chip market as a “zero sum game,” a view he considers incorrect.
“For those of us who have been working on AI infrastructure, there’s many different kinds of chips and systems that are optimized for many different kinds of models,” Kurian said.
He characterized the relationship with Nvidia as a partnership rather than a rivalry, noting that Google optimizes its Gemini models for Nvidia GPUs and recently collaborated to allow Gemini to run on Nvidia clusters while protecting Google’s intellectual property. “As the market grows,” he said, “we’re creating opportunity for everybody.”
The full stack advantage
Kurian attributed Google Cloud’s status as the “fastest growing” major cloud provider to its ability to offer a complete “stack” of technology. In his view, doing AI well requires owning every layer: “energy, chips or systems infrastructure, models, tools, and applications,” noting that Google is the only player that offers all of the above.
However, he said this vertical integration does not equate to a “closed” system. He argued that enterprises demand choice, citing how 95% of large companies use cloud technology from multiple providers. Consequently, Google’s strategy allows customers to mix and match—using Google’s TPUs or Nvidia’s GPUs, and Google’s Gemini models alongside those from other providers.
Despite the advanced infrastructure, Kurian offered a reality check for businesses rushing into AI. He identified three primary reasons why enterprise AI projects fail to launch: poor architectural design, “dirty” data, and a lack of testing regarding security and model compromise. Furthermore, many organizations fail simply because “they didn’t think about how to measure the return on investment on it.”
For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.
The history of the craftsmanship economy is littered with the ruins of fashion houses which lost their creative soul through founder absence, over-licensing, or managerial drift — as seen at once-iconic examples such as Halston, Pierre Cardin, Liz Claiborne, and Kate Spade — and internal turbulence (Gucci), as well as unsuccessful conglomeration efforts which proved incapable of preserving creative genius at scale.
In contrast to such unraveled tapestries, Bernard Arnault has not merely defied that history; he has fortified quality brands and built something entirely new and unprecedented.
Arnault did not merely preserve a single great house after a founder’s passing — a feat rare enough in creative industries. He has assembled, disciplined, and sustained an entire federation of once fragile maisons, each with its own lineage, mythology, tempo, and creative risk profile, transforming a constellation of independent brands into a pioneering global powerhouse, with LVMH the first European company to surpass a $500 billion valuation. Along the way, Arnault has become one of the rare titans whose vision has reshaped not just business, but culture and society more broadly.
That we had the opportunity to pick Arnault’s brain at all was exceedingly rare and unique. As his friend Steve Schwarzman reminded us during the award ceremony, he is “a most unusual person.” In a world of grandiose consumer goods promoters, it is rare to see a greatest brand builder also be a man of rare humble character.
Anna Wintour captured this paradox even more eloquently: “As many of you will have noticed, Bernard is not an easy man to get to know. I have been meeting with him for some four decades, and yet I still find him as fascinatingly enigmatic as Gerhard Richter’s Forest paintings — which, of course, are in Bernard’s collection. All I seem to have is traces and gestures, flickering from a person who has worked across the canvas at great speed.”
Arnault’s lessons start with relentless focus. As he declared in his acceptance remarks, “My time as founder and CEO of LVMH since the late ‘80s has taught me that as the world evolves around us, we must evolve with it and embrace change while never losing sight of the core values and guiding principles upon which our businesses and institutions are built. Today, I suspect we can all agree that change is happening faster than ever, and that the way in which we live, communicate and transact is being constantly reshaped by the geopolitical environment, economic uncertainty, and seismic events of our time, and not least our fast-developing technologies. I also suspect we share that turbulence and uncertainty are not barriers to leadership.
“In fact, quite the opposite. In turbulent times, we must anchor ourselves to our enduring values and principles. For LVMH, that anchor is clear: our commitment to exceptional craftsmanship, cultural heritage, and the relentless pursuit of excellence. These commitments are what our clients seek, what our brands are built on, and what ultimately stands the test of time. Staying true to those values in a volatile world is long-term stewardship.”
Arnault’s focus is so relentless that, as Anna Wintour eloquently explained, “To say that Bernard is interested in his companies is like saying renowned pianist Glenn Gould was interested in Bach. He is an obsessive who feels the enterprise in every corner of his soul,” telling a humorous story of how, when the two of them had a spare afternoon in DC, Wintour suggested perhaps visiting a couple of museums along the National Mall, or seeing what was on at the Kennedy Center. “Bernard took on the unhappy expression of a man who had been asked to attend a three-hour lecture on soil erosion. His notion of a great day in the American capital, it turned out, was the same as his notion of a relaxing Saturday morning in Paris: visiting all the LVMH shops in town to see what they could be doing better.
A second lesson is the importance of loyalty, commitment, and family. As Ivanka Trump explained to us, “The quality I most admire in Bernard has nothing to do with business. It’s his devotion to family. Every Saturday, without exception, the entire Arnault family gathers together for lunch at the home of Bernard and his amazing wife Helene — all of his children and all of their children. In a world that moves quickly, Bernard chooses presence. In a life defined by innovation, he chooses ritual. That same consistency defines his relationship with his team. Bernard expects excellence, and he offers loyalty, mentorship, and trust in return. Many of LVMH’s senior leaders have spent decades under his guidance — a testament to a culture built on integrity, humility, and shared purpose”.
Indeed, as Ivanka alluded to, Arnault defines family not strictly in the genetic sense. “My company is very much a family group, not only with my children, but it’s a way of managing a business. It’s not what we call in French, a societe anonyme — it’s the opposite. It’s a family. So everybody entering LVMH enters not only a big company, but a big family. They are members of the family, and we take care of them like family. Obviously, we have more than 200,000 people, so the relationship is not as close as in the small family, but it’s a family nonetheless. As for my children, I tried since their birth to explain to them that they are very lucky to be in a family that has a chance to manage such a group, but for getting responsibility, they have to merit the responsibility and to prove they can do it.”
A third lesson is the importance of a quality that Anna Wintour described as “brave and radical conviction,” or as Ivanka captured, “the right-brain/left-brain fusion to take the boldest risk, and still see around corners with uncanny business sense and precision.”
It is that visionary prescience which defines how Arnault has always perceived trends years before anyone else. As Steve Schwarzman noted, Arnault’s start in the luxury business was when he chose to retain “a small, unprofitable company called Christian Dior. He said he thought it had real potential — which I guess is one of the great understatements”. Though the group was bleeding cash at the time, Arnault knew it had value, as Ivanka related: “One of my favorite stories to tell Bernard tell is of his first trip to New York in the 1970s, when he asked a taxi driver if he knew the name of the French president. The cab driver said, no, but I know Christian Dior.”
That same visionary conviction to take big, bold bets holds true today, as Arnault perceived the shift towards premium experiences years before anyone else did. As Arnault describes it: “To give you one example: today people are looking not only for products, which I just described, but also for experiences. Over the years, we invested in many domains, we have some of the best hotels in the world — through Cheval Blanc and through Belmond. After COVID, the demand for these beautiful places has increased. People want to find the best qualities — the most extraordinary things. AI is very useful for some tasks. But AI cannot go in the kitchen very easily. AI cannot cook beautiful dishes.”
Similarly, as Anna Wintour points out, “today we are in the midst of a new moment of thrilling upheaval in fashion, and Bernard is once more at its core,” lifting and promoting a new generation of visionary young creatives and designers who blend innovation with tradition.
That vision and conviction flow through directly from Arnault himself, unimpeded by bureaucracy. As Schwarzman described, “You would think with a company of this scale, that he has a large staff, and there’s constant deals put in front of him for approval. But as it works out, he doesn’t have a staff. He does everything himself. He works with just one person on every deal, and he’s done a huge number of deals in his life — almost all of which have a very interesting real-estate component, where he had his own success before this building of the luxury business. He’s a brilliant strategist as well as a tactician.”
***
Ultimately, Arnault’s success is a reflection of his singular qualities, but his leadership lessons are timeless and widely transferable. A generation prior, Charles Revson, the pioneering founder of Revlon, arrogantly declared “creative people are like a wet towel. You wring them out and pick up another one.” Perhaps that helps explain why Revlon has since declared bankruptcy as its luster faded, for such arrogance would be anathema to Arnault, whose personal humility masks a man who has had a singular impact on the world.
As his trusted longtime deputy of five decades, Michael Burke, Chairman and CEO of LVMH Americas, declared to us: “Ladies and gentlemen, in June of 1963, a young boy in Frankfurt — myself — watched on a flickering black-and-white television as President Kennedy stood before half a million Berliners and, with fire in his voice, declared: Ich bin ein Berliner. On that day, something profound stirred within me. I sensed that a new era of boldness, freedom, and limitless possibility was dawning for the world. Thirteen years later, destiny led me to Paris. There, a young entrepreneur named Bernard Arnault looked at a nervous intern — again, myself — and chose to take a chance. Little did I know then that I had just entered the orbit of a man who would profoundly change the world — not through speeches, but through an unparalleled vision, unwavering courage, and an almost superhuman instinct for greatness. Today, as I stand before you to accept this esteemed award on his behalf, I feel a compelling urge to draw a parallel between that momentous day in 1963 and this moment. And so I proclaim: Bernard… Du bist ein Mensch.”
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
The oldest baby boomers — once the vanguard of an American youth that revolutionized U.S. culture and politics — turn 80 in 2026.
The generation that twirled the first plastic hula hoops and dressed up the first Barbie dolls, embraced the TV age, blissed out at Woodstock and protested the Vietnam War — the cohort that didn’t trust anyone over age 30 — now is contributing to the overall aging of America.
America’s population swelled with around 76 million births from 1946 to 1964, a spike magnified by couples reuniting after World War Two and enjoying postwar prosperity.
Boomers were better educated and richer than previous generations, and they helped grow a consumer-driven economy. In their youth, they pushed for social change through the Civil Rights Movement, the women’s rights movement and efforts to end the Vietnam War.
“We had rock ‘n’ roll. We were the first generation to get out and demonstrate in the streets. We were the first generation, that was, you know, a socially conscious generation,” said Diane West, a metro Atlanta resident who turns 80 in January. “Our parents played by the rules. We didn’t necessarily play by the rules, and there were lots of us.”
As they got older they became known as the “me” generation, a pejorative term coined by writer Tom Wolfe to reflect what some regarded as their self-absorption and consumerism.
“The thing about baby boomers is they’ve always had a spotlight on them, no matter what age they were,” Brookings demographer William Frey said. “They were a big generation, but they also did important things.”
By the end of this decade, all baby boomers will be 65 and older, and the number of people 80 and over will double in 20 years, Frey said.
The share of senior citizens in the U.S. population is projected to grow from 18.7% in 2025 to nearly 23% by 2050, while children under 18 decline from almost 21% to a projected 18.4%.
Without any immigration, the U.S. population will start shrinking in five years. That’s when deaths will surpass births, according to projections from the Congressional Budget Office, which were revised in September to account for the Trump administration’s immigration crackdown. Population growth comes from immigration as well as births outpacing deaths.
The aging of America is being compounded by longer lives due to better health care and lower birth rates.
The projected average U.S. life expectancy at birth rises from 78.9 years in 2025 to 82.2 years in 2055, according to the CBO. And since the Great Recession in 2008, when the fertility rate was 2.08, around the 2.1 rate needed for children to numerically replace their parents, it has been on a steady decline, hitting 1.6 in 2025.
Younger generations miss boomer milestones
Women are having fewer children because they are better educated, they’re delaying marriage to focus on careers and they’re having their first child at a later age. Unaffordable housing, poor access to child care and the growing expenses of child-rearing also add up to fewer kids.
University of New Hampshire senior demographer Kenneth Johnson estimates that the result has been 11.8 million fewer births, compared to what might have been had the fertility rate stayed at Great Recession levels.
“I was young when I had kids. I mean that’s what we did — we got out of college, we got married and we had babies,” said West, who has two daughters, a stepdaughter and six grandchildren. “My kids got married in their 30s, so it’s very different.”
A recent Census Bureau study showed that 21st century young adults in the U.S. haven’t been adulting like baby boomers did. In 1975, almost half of 25-to-34-year-olds had moved out of their parents’ home, landed jobs, gotten married and had kids. By the early 2020s, less than a quarter of U.S. adults had hit these milestones.
West, whose 21-year-old grandson lives with her, understands why: They lack the prospects her generation enjoyed. Her grandson, Paul Quirk, said it comes down to financial instability.
“They were able to buy a lot of things, a lot cheaper,” Quirk said.
All of her grandchildren are frustrated by the economy, West added.
“You have to get three roommates in order to afford a place,” she said. “When we got out of college, we had a job waiting for us. And now, people who have master’s degrees are going to work fast food while they look for a real job.”
Implications for the economy
The aging of America could constrain economic growth. With fewer workers paying taxes, Social Security and Medicare will be under more pressure. About 34 seniors have been supported by every 100 workers in 2025, but that ratio grows to 50 seniors per 100 working-age people in about 30 years, according to estimates released last year by the White House.
When West launched her career in employee benefits and retirement planning in 1973, each 100 workers supported 20 or fewer retirees, by some calculations.
Vice President JD Vance and Tesla CEO Elon Musk are among those pushing for an increase in fertility. Vance has suggested giving parents more voting power, according to their numbers of children, or following the example of Hungary’s Viktor Orbán in giving low-interest loans to married parents and tax exemptions to women who have four children or more.
Frey said programs that incentivize fertility among U.S. women hardly ever work, so funding should support pre-kindergarten and paid family leave.
“I think the best you can do for people who do want to have kids is to make it easier and less expensive to have them and raise them,” he said. “Those things may not bring up the fertility rate as much as people would like, but at least the kids who are being born will have a better chance of succeeding.”
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Emilie Megnien in Atlanta contributed to this report.
Politics8 years ago