Cathie Wood Says an AI Spending Squeeze Could Make the Boom Last Longer

Wall Street took a $3 trillion punch on 5 November, and Cathie Wood's answer is: good. The ARK Invest chief executive says a slowdown in AI infrastructure spending could leave the industry healthier, not weaker, according to her November In the Know commentary published on 7 November.

The sell-off was brutal and fast. The S&P 500 slid 4.36% while the Nasdaq Composite dropped 5.52% — its steepest one-day fall since April 2025. Nvidia shed more than 9%, with the companies that supply AI infrastructure hit hardest.

Politics lit the fuse. Democrats swept both chambers of Congress in the 3 November midterm elections, sparking fears that tougher scrutiny of data centres could stall construction. Those majorities don't take office until January, and no nationwide ban on AI building exists — the losses priced in worry about future spending, not rules on the books now.

Wood's argument hinges on the gap between spending fast and spending well. Power supplies, semiconductors and construction are all bottlenecks, and she thinks those constraints could squeeze out waste. Getting efficiencies in early, she said, could make the tech revolution 'longer-lasting and much healthier' — a contrast she drew with the overinvestment that wrecked parts of the internet bubble.

She pointed to credit default swap spreads as evidence that expectations are shifting, noting that spreads tied to major tech companies had improved slightly after the election. Her read: investors now expect a more measured buildout of large computing networks. Narrower spreads don't prove the financial risk is gone, though, and delayed data centres still mean postponed equipment orders and longer waits for returns.

Wood's optimism runs past tech. She sees AI productivity gains flowing to workers and businesses through higher pay, fatter margins, more investment and potentially lower prices, and calls the US economy 'on a growth trajectory that is much stronger than most people recognize.' The government's advance estimate on 29 October put third-quarter real GDP growth at an annualised 3.4%. Housing is still soft, but she expects a recovery, plus cheaper AI, better productivity and lower oil prices combining into what she called a 'win-win situation' for inflation.