The AI investment boom is set to push global growth further than initially modeled, Bank of America said in a midyear report published late last week.
Spurred by a mix of tailwinds, BofA strategists now see the global economy growing by 3.2% in 2026 and by 3.5% in 2027, with AI in the driver’s seat. The economists had previously estimated growth at 3.1% and 3.4% in 2026 and 2027, respectively.
“More than the peace deal, the main drivers of the upward revision to global growth this year are the AI-driven export cycle in Asia and the AI investment boom in the US, while lower oil prices boost growth mildly in developed markets in 2027,” global economists Claudio Irigoyen and Antonio Gabriel wrote to clients on Monday.
AI gradually takes over from consumer spending
Through 2025 and into 2026, AI has increasingly dominated US final domestic demand growth, taking over from the traditional leader — consumer spending — per data published by the bank. That trend mean-reversed in the third and fourth quarters of 2025, but in the first quarter of 2026, AI was far and away the leader.
Where AI has boomed, consumer spending has been hamstrung by war-driven surging energy prices through the front half of the year and by steadily rising US inflation that won’t seem to go away — and which looks increasingly likely to push the US Federal Reserve to raise rates.
The picture for the US consumer isn’t all bad, BofA noted: “Before the deal, we were impressed with the resilience of the consumer to the gas shock. But we were concerned about how long it could last, since tax-related fiscal stimulus, which acted as an offset, was plateauing and real income was declining.”
Now, the bank sees “robust growth” for consumer spending through the second half of the year.
But its role in leading the economy — see 2024 and 2025 in the chart above — is losing ground to the AI investment cycle that has seen megacap tech leaders pouring hundreds of billions of dollars into a race with no end in sight.
It’s also important to note: AI’s driving force on the economy isn’t restricted to the US. The boom in investment has provided a boon for the export economy in China, where many machinery parts are manufactured and shipped to global buyers, and to emerging-market economies.
For an example of the latter, look no further than South Korea, where the Kospi Composite index (^KS11) has raced upward by just shy of 100% since the start of the year. The index is heavily weighted toward the semiconductor trade, helmed by SK Hynix (000660.KS) and Samsung Electronics (005930.KS).
