Wall Street has a recurring habit of declaring tech spending bubbles right before the spending accelerates. Franklin Templeton’s head market strategist just told the doubters to sit down.
Chris Galipeau, Head Market Strategist at Franklin Templeton Institute, used the firm’s “Talking Markets” podcast on July 21 to deliver an unambiguous message: AI capital expenditures are “real and ongoing,” not a rumor, not a hype cycle, and certainly not slowing down. His core data point is hard to argue with. The top five hyperscalers spent just over $100 billion in CapEx back in 2023. That figure is projected to exceed $700 billion in 2026.
That’s roughly a 7x increase in three years. For context, $700 billion is larger than the entire GDP of Switzerland.
The numbers behind the confidence
Galipeau’s argument rests on a straightforward thesis: the money flowing into AI infrastructure is generating measurable earnings growth, not just impressive press releases.
He forecasts that the S&P 500 could achieve over 20% year-over-year earnings growth in the second quarter of 2026. Two primary drivers sit behind that projection: AI-related spending filtering into corporate bottom lines, and improving bank earnings.
The strategist framed the current investment cycle as being in the “early innings,” a deliberate pushback against the growing chorus of analysts questioning whether hyperscalers will ever see adequate returns on their massive infrastructure bets.
Galipeau’s argument extends the relevance of this spending beyond just Nvidia’s GPU sales and into broader enterprise and consumer applications, suggesting the investment thesis has legs well past the hardware layer.
What this means for crypto markets
Galipeau’s commentary didn’t mention Bitcoin, Ethereum, or any digital assets. Not even a passing reference.
More immediately, the macro picture Galipeau paints is relevant. If S&P 500 earnings growth exceeds 20% in Q2 2026, that’s a risk-on signal for virtually every asset class, crypto included. Strong equity earnings tend to correlate with investor confidence, and confident investors allocate to higher-risk assets.
The $700 billion isn’t going into decentralized GPU networks. It’s going into hyperscaler facilities owned by the usual suspects.
What investors should watch
For crypto market participants, the key variable isn’t whether AI CapEx is real. Galipeau has made that case convincingly. The question is whether that spending eventually creates overflow demand for decentralized compute, data storage, and AI-adjacent blockchain services.
Traders should also monitor whether the projected 20% earnings growth in Q2 2026 actually materializes. If it does, expect a broader risk appetite that lifts crypto alongside equities.
The spread between hyperscaler CapEx growth and actual revenue generation from AI products will be the single most important metric to track over the next several quarters. A $700 billion spending figure only justifies bullish positioning if the revenue follows. Franklin Templeton is betting it will.