BlackRock CEO Larry Fink Thinks a Data Center Moratorium Could Trigger a Recession. If He's Right, Here's What History Says to Do Next.
The key is not to panic.
Billionaire Larry Fink, CEO of BlackRock, has expressed concern that a moratorium on AI data center construction could lead to a recession in the United States. In an interview with CNBC, Fink stated that such a moratorium could trigger a recession due to the massive amount of capital expenditures associated with building out AI infrastructure.
Estimates suggest that AI capital expenditures could reach over $1 trillion in 2027 and potentially surpass $5 trillion by 2030. Goldman Sachs Research indicates that nearly half of the S&P 500's 2026 earnings growth can be attributed to AI-related investments. If a significant portion of this growth is lost, it could have a negative impact on the overall economy.
However, history provides guidance on the best course of action for investors in such a scenario. The Motley Fool analyzed the S&P 500's performance during every recession since 1980 and found that, in most cases, the market had started to recover before the recession ended. In half of the recessions since 1980, the S&P 500 even experienced gains.
The Motley Fool also noted that a recession is defined as two or more consecutive quarters of negative economic growth, which means that determining when a recession begins is uncertain. As a result, pulling money out of the market at that point may lead to selling near the bottom. Ultimately, the smartest strategy for investors during a recession is to maintain a long-term perspective and stay invested in a diversified stock portfolio.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
