We’re witnessing a wave of announcements from companies across multiple sectors, promising trillions of dollars in capital investment into the United States. While some of these commitments remain aspirational, even a portion materializing would mark a significant economic shift. As investors, understanding the magnitude and interconnected nature of these developments can help us identify long-term opportunities.
A New Era of Domestic Investment
Across the industrial landscape, companies are building new manufacturing facilities on U.S. soil. These aren’t isolated projects. They’re tied to a broader resurgence of American-made production, supported by government incentives, tax credits, and strategic supply chain re-shoring.
What happens when factories are built? Jobs follow: first in construction, then in operations. These facilities won’t be concentrated in a single region but will appear where infrastructure, energy, and water access make the most sense. As this expansion unfolds, the surrounding cities will need stronger infrastructure such as roads, sewers, emergency services, amplifying the economic impact.
This snowball effect, what I call a “melt-up,” has the potential to lift many corners of the economy simultaneously.
The Power (and Challenge) of Energy
To power these new manufacturing hubs, we must also build out the energy/power grid. But it’s not just about having electricity, it’s about having enough affordable energy.
We’re already seeing signs of this shift in the utility sector. Historically, utilities have been labeled “slow growth,” chugging along at 0.5% annual growth. Today? That number is climbing to 3% or more. That may sound modest, but it’s a six-fold increase; an enormous change in trajectory.
As the demand for reliable power grows, companies in energy infrastructure are becoming increasingly attractive from an investment perspective.
Artificial Intelligence (“AI”) and Robotics: Tools for Efficiency or Disruption?
AI continues to dominate headlines, but its real-world impact is just beginning. Major tech companies are increasing capital expenditures at staggering rates. Google alone is projected to spend $85 billion this year, up by $10 billion just in the last three months. A significant chunk of that is geared toward AI infrastructure. (Source: CNBC)
The hope is that AI will improve efficiency in manufacturing and beyond. Meanwhile, robotics, which are already integral to logistics giants like Amazon, could dramatically reshape how goods are produced and moved. Some are calling 2025 the year of the robot.
Will these advances displace workers? In some roles, yes. But they’ll also create new jobs, some of which haven’t even been imagined yet. Managing robots, programming AI systems, and maintaining advanced facilities will require a workforce with a different skill set.
As investors, we need to remain attuned to both sides of this equation: the efficiency gains that improve profitability and the workforce transitions that affect long-term sustainability.
The Role of Incentives
We can’t talk about this shift without talking about incentives. The new tax bill has created powerful motivations for companies to invest in R&D and capital expenditures. For example:
- Full R&D Expensing: R&D expenses for domestic activities can be deducted immediately (not amortized) through 2029, improving cash flow and tax certainty.
- CapEx Deductions: 100% bonus depreciation of qualifying capital assets (including machinery, equipment, production property) for assets placed in service beginning Jan 19, 2025.
- Consumer Incentives: Even individuals may benefit, such as interest deductibility up to $10,000 in interest paid on loans for new US-assembled vehicles (2025-2028).
These are meaningful tailwinds that fuel activity across industries. As Americans, we love incentives. As investors, we watch for where those incentives will spark growth.
A Ripple Effect Across the Economy
This isn’t just about factories and data centers. As more people find work in construction, production, and tech, consumer spending will rise. That boosts restaurants, retail, housing, and services, creating a ripple effect that touches nearly every part of the economy.
We’re still in the early innings, and many of these outcomes are if-come. They depend on things going right. But the attempt itself, the forward momentum, is worth paying attention to. Lofty goals are only achieved when someone decides to try.
Final Thoughts for Our Clients
This evolving landscape presents both risk and opportunity. As your investment team, we’re tracking where the incentives point, where infrastructure is being laid, and where long-term demand is building. We're especially focused on sectors benefiting from these tailwinds: energy, utilities, advanced manufacturing, automation, and infrastructure.
While we don't know how all of this will play out, we are positioning portfolios to benefit from these powerful trends, while remaining disciplined in our analysis and selective in our investments.
This commentary is for informational and educational purposes only and includes general economic and market conditions. Data and other market and economic information referenced is from sources believed to be reliable and opinions are subject to change.
Carnegie Investment Counsel is a Registered Investment Advisor (RIA) dedicated to helping high-net-worth individuals and families navigate investment opportunities with transparency, diligence, and personalized service. Registration as an investment adviser does not imply a certain level of skill or training. For a more detailed discussion about Carnegie’s investment advisory services and fees, please view our Form ADV and Form CRS by visiting: https://adviserinfo.sec.gov/firm/summary/150488.
