«Without the AI investment cycle, global growth would be significantly weaker – possibly even negative,» says Julien Lafargue, Chief Market Strategist at Barclays Private Bank. The United States in particular is benefiting from the billions being spent by major technology companies.

According to Barclays, between 50 and 75 percent of US economic growth can now be attributed directly or indirectly to AI investment.

The AI Train Keeps Rolling

For Lafargue, the boom is far from over. Although investment growth rates are likely to slow over time, he does not expect the trend itself to end anytime soon.

There are several reasons for this. Companies need to adopt AI to avoid falling behind their competitors. Investors want exposure to the development. At the same time, governments are supporting the expansion of the technology because of its strategic importance in the rivalry between the United States and China.

«No one wants to be left behind,» Lafargue says.

Where Corrections Could Hit

Nevertheless, he expects corrections in individual market segments. Semiconductor and memory-chip manufacturers in particular have seen enormous share-price gains in recent years, pushing valuations to levels that may be difficult to sustain.

Such setbacks, however, should not be mistaken for the end of the AI cycle. Rather, they would represent a normalisation within a long-term trend.

Productivity Will Determine Success

For Barclays, AI itself is ultimately not the real investment theme. What matters is the productivity that the technology can generate.

Only if companies use artificial intelligence to operate more efficiently and improve their margins can the current investment boom be justified.

Lafargue goes a step further: In the long term, productivity gains could even help alleviate one of the biggest economic policy challenges facing many industrialised countries – rapidly rising public debt.

«The easiest way to make high levels of debt sustainable is through stronger economic growth. And for that, you need higher productivity,» he says.

Europe Is Falling Behind

Lafargue is considerably more sceptical about Europe’s prospects.

Although the infrastructure and defence programmes announced in Germany late last year briefly raised hopes, investors overestimated their impact, he says.

Building new infrastructure takes years, sometimes decades. Higher defence spending is also likely to provide only limited growth impetus in the short term.

Political uncertainty adds to the challenge.

The French presidential election in 2027, in particular, is likely to make international investors more cautious. At the same time, Germany’s fragile governing coalition is currently preventing Europe from becoming sustainably more attractive to equity investors.

Switzerland Benefits From Stability

By contrast, Lafargue sees Switzerland as being in a relatively comfortable position.

Economic growth may also be moderate, but the country benefits from its stability, particularly in times of geopolitical uncertainty.

Switzerland therefore remains an attractive safe haven for international investors.

On the equity market, however, Switzerland faces a structural disadvantage: Heavyweights such as Nestlé and Roche are currently not at the centre of the global AI boom.

The Next Phase Is Yet to Begin

According to Barclays, markets are currently focused almost exclusively on the infrastructure underpinning AI – data centres, chips and cloud providers. The real winners, however, may still be to come.

Lafargue expects AI to increasingly spread into traditional industries. He sees particularly strong potential in healthcare, for example in drug development and diagnostics.

«The greatest economic benefit will probably only emerge once AI is deployed across the entire economy,» he says.

In the long run, Europe and Switzerland could even benefit more strongly from this development than they do today.

China Could Spring a Surprise

Many investors are also underestimating China, according to Lafargue.

While the country continues to struggle with weak consumer demand and problems in the property sector, it also has excellent conditions for the next stage of artificial intelligence development.

Whereas the current wave has primarily centred on software, the focus is likely to shift increasingly towards robotics and so-called «physical AI».

China has both powerful AI models and world-leading industrial manufacturing capabilities in this field.

If companies in these areas go public in the coming years, Lafargue believes they could become one of the most compelling investment themes of the next few years.

The US Remains the Pace-Setter

Politically, too, the United States remains the most important country for investors.

According to Lafargue, there is a realistic possibility that Republicans could lose the House of Representatives in November’s midterm elections while retaining control of the Senate.

Such political gridlock could make reforms more difficult, but at the same time increase the likelihood of additional fiscal measures – an environment that could provide short-term support for equity markets.

For Europe, developments in the United States remain crucial. “It is difficult to imagine Europe performing strongly on a sustained basis if the US economy is weakening significantly at the same time,” Lafargue