Rob Rowe, Citi Research head of global strategy, joins 'Money Movers' to discuss AI spending and his read on the market.

Rob Rowe from Citi highlighted a significant shift in economic growth drivers, with AI-related spending now contributing as much to GDP growth as private consumption. He noted that while the U.S. economy has slowed, investment in technology and infrastructure, particularly in data centers and digital services, remains robust and is largely funded by strong cash flows rather than debt.

Rowe also addressed concerns about market concentration in the tech sector, suggesting that a broader market participation could emerge in the coming year. He emphasized that current conditions differ from the late 1990s tech bubble, as today's leading companies have solid earnings and are not over-leveraged.

Market likely to broaden out in 2026, says Citi's Rob Rowe

Rob Rowe who joins us now. There was an interesting chart that caught my eye from Apollo this morning on this whole A.I. theme which showed that historically private consumption has represented about 70 percent of GDP growth. And in 2025 there's been this inflection point where now it's the A.I. spending contributed to the same amount as private consumption for that GDP growth. And I'm just curious you know what you think that means and kind of what that says about the stability of where GDP is right now. Well I think I mean GDP at least in the U.S. we anticipate it slowed in the first half. I think we were at one to one and a half percent. And our anticipation for the remainder of the year and for the second half is 1 percent. So the market is the economy is slowing down a little bit. But when it comes to A.I. and CapEx I think that's a different story. I think markets and others are looking beyond what could be a slowdown in the U.S. this year and looking into next year in terms of what the potential growth could be as a result of these you know tech and innovation that we're beginning to see. I think adoption rate is one of the things we're looking at right now. Like when we look past you know at the at the dotcom bubble back you know turn of the century it's really a matter of a lot of tech and innovation comes in and then the adoption rate is a different matter. And that can take some time. To your point that you were saying we could see that adoption rate take a little longer than anybody expects. But the other thing I would say about the A.I. companies is when we look at things on a peg ratio they're actually valued fairly well versus growth. If you were looking at a growth opportunity there's still good valuations here relative to where you anticipate growth being. Yeah I guess another way to ask the question is whether or not you think the economy is becoming too reliant or too dependent on A.I. and some of this capex spending which presumably if you know to Mike's point regarding investor patience and just the appetite to keep spending that's a spigot that could be turned off a lot easily a lot easier than say consumer spending. I mean no doubt if if you're going to be growing that business you're going to have to grow the infrastructure. And that's what it's been about. I noticed the discussion on software software isn't the focus right now. It's really the data centers the power grid the chips everything that needs to be built up to handle large databases to handle all of the all of the operation and consumption of that data and innovation. Another interesting thing to look at is that services is now 40 percent of global exports. And part of that that's growing is a thing called digital services exports that's been growing exponentially. So again you know these are cash flows are very strong as opposed to the turn of the century when there weren't any cash flows. Now you have very very strong cash flows that are driving this. And most of that capex and infrastructure has been funded by cash. It really isn't a matter of these companies leveraging up in some way. So you're not a fan of the recent analogs to 98 99. Not as much because back then you had a lot of over leveraged situations. You didn't have a lot of companies that had earnings here. You're talking about companies that have very solid earnings very strong cash flow and they're funding a lot of this growth through that cash flow. So in many respects it's a little different than that. Yeah. The concentration risk of course is one that a lot of people have have been concerned about. Is that something that has you know given you pause. We do expect a broadening out at some point. Probably now I'm beginning to think that happens next year. So we would encourage folks to look at other industries and other sectors. But right now it's still the growth driver. We were in and on the whole growth aspect of this and we're still overweighting tech and communications.

Hamas on Monday informed mediators that it had accepted a ceasefire deal proposal submitted to it the day before, according to international and Israeli outlets.

Jerusalem

Middle East Conflict

Reports: Hamas accepts latest Gaza ceasefire proposal

Hurricane Erin will bring dangerously rough surf to parts of the U.S. East Coast. Over the weekend, Erin's outer bands lashed Puerto Rico with up to 7 inches of rain and flooding parts of the island.

East Coast of the United States

Erin expected to bring dangerous conditions to U.S. East Coast

Ukrainian President Volodymyr Zelenskiy will be joined by several European leaders at a White House meeting with President Donald Trump on Monday (August 18) aimed at brokering a peace deal between Russia and Ukraine.

Washington

Ukraine Invasion

Zelenskiy bringing European leaders to Trump meeting

Ahead of his Monday meeting with President Trump, Ukrainian President Volodymry Zelenksyy says his country will not give up any territory to Russia, even as the White House insists potential land swaps will be necessary. Willie James Inman reports.

Kyiv

Ahead of Trump meeting, Zelenskyy says won't give territory to Russia

Thousands of Israeli protesters demanded a deal to secure the release of hostages still held by Hamas in one of the biggest demonstrations since the war in Gaza began. Debora Patta reports.

Thousands of Israelis protest in Gaza, call for end to fighting

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Zelenskyy, European allies to meet with Trump to discuss peace

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Paris

European leaders stress unity with Ukraine ahead of peace talks

International condemnation and pressure from allies have done nothing to stop Israel's plan to displace the people of northern Gaza. Israel on Saturday (August 16) said it is preparing to move Palestinians from combat zones to southern Gaza.

Israeli military prepares to move Palestinians to southern Gaza

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Tel Aviv-Yafo

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Anchorage

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"Fight the Trump Takeover" protests held across U.S.

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Ukrainians sceptical of Vladimir Putin’s intention

Being a Category 1 hurricane, Erin underwent a 'rapid intensification' which helped the storm to grow and strengthen to a powerful Category 5. Hurricane Erin won't make a direct hit on the U.S., but it will produce dangerous surf conditions for the entire East Coast.

San Juan

Hurricane Erin 'rapidly intensifies' to a Category 5

The Washington, D.C., police chief will remain in command of the local force following a settlement with the Trump administration over the federal takeover, but they are required to cooperate with the White House's immigration policy.

D.C. police retain some control after deal with Justice Department

The Atlantic Ocean's first hurricane of the season, Erin, has continued to gain strength and currently sits off the coast of Anguilla.

Hurricane Erin strengthens in the Atlantic

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President Trump and Russian President Vladimir Putin met in Alaska for a high-stakes summit over ending the war in Ukraine. Nancy Cordes and Margaret Brennan have coverage and analysis.

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Israel's far-right finance minister approved the construction of a controversial new settlement in the West Bank, saying it "finally buries the idea of a Palestinian state." But it's unclear if this move will actually go through. Rights groups swiftly condemned the plan.

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Ukrainian President Volodymyr Zelenskyy met with British Prime Minister Keir Starmer in London. This comes one day before U.S. President Donald Trump is set to meet with Russian President Vladimir Putin in Alaska to discuss a possible ceasefire in Ukraine.

London

Zelenskyy, Starmer meet ahead of Trump, Putin summit in Alaska

Speaking in the Oval Office on Thursday, President Trump sounded optimistic about his upcoming summit with Russian President Vladimir Putin in Alaska.

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