The AI frenzy is “siphoning” global capital—has AI already bottomed out the US dollar?

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Trillions of dollars in AI infrastructure investments by U.S. technology companies are reshaping global capital flows, and this dramatic shift at the corporate level has evolved into a key support factor for the U.S. dollar. Although this dynamic has not yet fully entered the mainstream narrative of the foreign exchange market, its boosting effect on the dollar is quietly emerging.

U.S. tech giants have significantly raised their expectations for AI-related capital spending. According to Windy Trading Desk, Barclays said in a research report on the 9th that spending forecasts for 2025 have risen from several hundred billion dollars more than a year ago to about $500 billion, with the total investment over the next five years expected to exceed $3 trillion—by some estimates, more than 10% of GDP. These investments are attracting capital from around the world through channels such as corporate bond issuance.

This trend has already begun to emerge in macro data. In the first two quarters of 2025, the contribution of investment projects to U.S. GDP rose to an annualized 1 percentage point per quarter, the highest level since 2023. The dollar sentiment index has now entered positive territory, indicating an improving market view of the dollar.

Barclays believes these developments reinforce its previous judgment—that the dollar may have already bottomed out. Although the foreign exchange market narrative still focuses on data gaps and government shutdown risks, the growth resilience brought by the AI investment boom, the repricing of rate expectations, and the influx of global capital are becoming the "silent support" of the dollar.

AI Investment Far Exceeds Expectations, Driving Dollar Bottoming

U.S. tech companies' AI capital spending expectations have been significantly raised in the past few months. More than a year ago, the market expected AI-related spending in 2025 to be only a few hundred billion dollars. Now this number has climbed to about $500 billion, and the total investment over the next five years is expected to exceed $3 trillion. By some estimates, this is more than 10% of U.S. GDP.

This investment boom has begun to have a substantive impact on the macroeconomy. In the first two quarters of 2025, investment's contribution to U.S. GDP rose to an annualized 1 percentage point per quarter, reaching this level for the first time since 2023.

The economic output resilience driven by AI investment is reshaping market expectations. Barclays points out that, despite base effects possibly causing the growth boost from investments to weaken at some point next year, currently AI investment remains in its acceleration stage. The acceleration in growth is accompanied by the strong performance of U.S. assets, providing support for the dollar.

In addition, the multiplier effect of investment spending could push rate expectations to further face reality. The previously anticipated sharp slowdown in economic growth may be hard to realize, meaning the probability of a deep Fed rate cut cycle decreases. This part of output resilience also spurs a repricing of policy rate expectations, helping to stabilize the dollar. Barclays’ dollar sentiment index has now turned positive.

Corporate Bond Issuance Siphons Global Capital

An underestimated effect of the AI investment boom on the dollar is its absorption of global capital. Through large-scale corporate bond issuances, the U.S. is drawing in resources and capital from around the world. Whether via direct participation in new issues or through reverse Yankee bond issuances, the advantage created by this investment boom is channeling resources into the dollar. This capital flow forms a "silent," yet substantial, support for the dollar.

Barclays emphasizes that the macro field sometimes sees corporate-level developments as if they were happening in a parallel universe. While the foreign exchange market narrative remains stuck on data gaps and government shutdown risks, the “elephant in the room” is in fact the huge AI investments by technology companies and the global capital flows they trigger.

Risks Facing Dollar Bottoming Expectations

These developments reinforce the view expressed by Barclays in its September Outlook and Global Outlook report—that the dollar may have already bottomed out. In fact, the dollar’s current trading level is even stronger than the institution’s previous above-consensus expectation. Barclays says in hindsight it should have kept its initial medium-term prediction of EUR/USD at 1.13.

However, this judgment still faces key risks. Barclays points out that major risks include interference with the independence of the Federal Reserve—even though risks from the Cook court ruling have recently abated. In addition, potential deterioration in the corporate bond market, especially the widening of credit spreads in certain segments of the U.S. tech credit sector, is a risk factor worth watching.

Despite these risks, the three main factors—growth resilience driven by the AI investment boom, repricing of rate expectations, and global capital inflows—are providing multiple sources of support for the dollar. This “quiet rally of the dollar” may mark a significant turning point in the dollar’s trend.

Risk DisclaimerThe market involves risk and investments need to be made cautiously. This article does not constitute personal investment advice, nor does it consider the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investing based on this information is at your own risk. ```