Throughout history, technological revolutions have reshaped economies and societies, with the latest wave being driven by artificial intelligence (AI). This ongoing transformation resembles previous revolutions brought on by electronic computing, demonstrating how a technological breakthrough can significantly influence global markets and economic structures. AI's impact on asset pricing and the global economy can be primarily understood through two main mechanisms: the ebb and flow of the dollar tide and production investment. Financial analysts are increasingly recognizing that the AI revolution is just beginning, suggesting that we are likely still in the early stages of a substantial expansion in capital expenditure related to AI. Drawing parallels with historical trends, it's essential to anticipate that the ramifications of AI across various sectors will unfold in three distinct phases: initial direct investment growth in technology industries, a fundamental reorganization of manufacturing processes, and a marked increase in overall productivity.

Deepseek, a trailblazing initiative, exemplifies this accelerated diffusion of AI technology. If 2024 is characterized by AI's substantial influence on U.S. asset pricing, the repercussions in 2025 will likely reach even deeper into both the American and global economic landscapes. As the waves of AI innovation move across sectors, the implications will be felt far and wide.

AI technology stands at the forefront of asset pricing in the United States and worldwide. The ongoing wave of AI is considerably reshaping global asset markets, impacting U.S. stocks, bonds, and the dollar itself. This paradigm shift is particularly significant; the sustainability of the AI industry in America could emerge as a central variable determining market trends. The role of Deepseek in this narrative has illuminated a broader understanding—AI's technological advancements do not remain contained within American borders but extend to influence economic and political structures worldwide, including in pivotal players like China. Observers are encouraged to closely monitor technological breakthroughs, investment trends, and evolving policy frameworks relating to the AI sector.

Looking back at history, it’s evident that prolonged economic patterns in the U.S. have often been driven by successive waves of technological innovation. Since the 1980s, America has experienced four significant technological revolutions, starting with the personal computer revolution in the 1980s, followed by the internet revolution in the 1990s, the rise of smartphones and mobile internet around 2010, and now the current AI-driven wave beginning around 2022. Each of these technological advancements not only fostered economic growth in the U.S. but also led to transformations in global asset pricing, transcending the short cycles of economic demand.

Moreover, technological revolutions have a profound influence on capital market valuations. The impact of technology on asset pricing can be dissected into two primary mechanisms: the investment growth mechanism and the liquidity pricing mechanism. The former highlights how technological revolutions spur the growth of high-end manufacturing and high-value service industries in the U.S., particularly in sectors such as information technology, finance, and specialized services like consulting and software development. These sectors have become significant contributors to the increase in U.S. GDP.

Conversely, the liquidity pricing mechanism suggests that technological advancements often trigger an influx of investment into the U.S. As American innovation propels the economy into a high-growth phase, global investors typically flock to the U.S. market, drawn by promising prospects. The spreading influence of technological revolutions further shapes the trajectory of the global dollar tide.

At present, the AI investment landscape is experiencing remarkable dynamism. The capital expenditure cycle in the AI industry has yet to peak, suggesting ample room for further investment expansion. For instance, recent years have evidenced that the expenditure on constructing manufacturing facilities in high-end industries has significantly outpaced investments in equipment—highlighting that the foundational infrastructure for the AI industry is still under development. This situation Portents a forthcoming wave of large-scale equipment investments.

The current capital expenditure climate related to AI in the U.S. is at a zenith, primarily driven by the seven technology giants known for their substantial involvement in AI investments. These companies continue to expand their spending on AI infrastructure, computing capabilities, software, and hardware. Another encouraging sign is the ongoing expansion of AI's mid-level supply chain, which reveals an upward trajectory from chip manufacturing to software and hardware development.

Deepseek represents a watershed moment in AI technology, signaling a significant breakthrough that indicates a rapid acceleration in the AI revolution's diffusion process. The implications of technological advancements extend beyond immediate gains, highlighting the potential for enduring changes in productivity and industry structures. Historical trends indicate that AI may dramatically enhance productivity levels and facilitate significant restructuring within various industries.

Reflecting on the monumental technological revolutions driven by electronic computing, we observe that their economic impact can be categorized along three distinct dimensions: direct investment growth in the technology sector, a reconfiguration of the production landscape, and overall enhancements in efficiency. During the internet revolution in the 1990s, there was a marked increase in IT investments—encompassing computers, servers, and networking equipment—successfully elevating enterprise information systems and operational efficiencies. Similarly, the mobile internet revolution around 2010 saw corporate investments in cloud computing and mobile devices soar, enhancing collaboration and data management capabilities.

The current AI wave is predicted to adhere to these historical patterns, with a strong likelihood of investing in software and computing upgrades. Such developments promise to accelerate global productivity while inciting industry innovations across the automobile, smartphone, computer, and robotics sectors. The forthcoming enhancements in production efficiency will permeate diverse fields. Investments in AI-related software and hardware will likely surge, particularly in areas like advanced data analytics, automated decision-making, intelligent customer service, and AI-driven code generation, ultimately heightening operational efficiencies for businesses. The anticipated growth in AI-related investment could emerge as a primary driver of productivity enhancement across various sectors.

To project the potential impact of the current AI wave on growth, we can utilize historical patterns in technological investment diffusion. Evaluating two distinct dimensions reveals the direct effects of technology sector investment expansion on GDP growth and the indirect growth fostered by reforms in manufacturing processes. In particular, attention should be focused on four critical industries: automotive, mobile phones, computers, and robotics.

Estimates suggest that investments in AI software and hardware could directly contribute approximately 0.15% to U.S. GDP growth by 2025—an increase to 0.24% by 2028. Incorporating the indirect effects of growth stemming from the four highlighted industries, the total projected contributions might rise to 0.24% for 2025 and 0.38% for 2028. This expansive growth potential underscores the transformative power that AI technology holds, as it positions itself as a catalyst for economic dynamic shifts and productivity enhancements moving forward.