Demand for data centers is not slowing down

**Novasafo** (0:01)
Gaging the Health of the US. Consumer Through the Lens of Retail Sales From Marketplace in Los Angeles, I'm Novasafo, and for Kimberly Adams. Tomorrow we get the latest retail sales data from the Census Bureau. Analysts expect they'll tick up just slightly, maybe one-tenth of a percent. For the last several months, the story around retail sales is that, even though consumers might be stressed about the economy, they're still spending.
Gus Fauchet, chief economist at PNC Financial Services Group, says we're likely to see that again in the data for July.

**Gus Fauchet** (0:35)
Consumers continue to increase their spending. Gasoline prices have been down over the summer, so that's going to provide another modest boost to consumers.

**Novasafo** (0:45)
So why is spending holding up? It's our old friend, the K-shaped economy. High-income earners are benefiting from stock market gains, even as low-income consumers are struggling.
Another factor is higher tax refunds this year, as a result of the Republican Tax and Spending Law enacted in 2025

**Gus Fauchet** (1:03)
I think that impact has largely run its course, so that will not be as much of a positive in the second half of 2026 as it was in the first half.

**Novasafo** (1:13)
Okay, but we still have a decent job market, right? Except the US economy did lose 23,000 jobs in July.
Worrisome? Foshey says that's likely an aberration, not a pattern, but still consumers are straining to hold up against headwinds.

**Gus Fauchet** (1:30)
Higher energy prices are going to be a drag on holiday spending.
We're still dealing with tariffs that have raised prices for goods. So I would expect that we'll see modest growth in holiday sales in 2026

**Novasafo** (1:45)
That's Gus Foshey, Chief Economist at PNC Financial Services Group.

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**Novasafo** (3:37)
The AI trade is getting a boost from a flurry of earnings reports showing infrastructure spending and data center demand is not slowing down anytime soon.
Cloud computing providers, chip makers, server makers, all announced big numbers and bigger hopes in quarterly earnings reports. Russ Mould is investment director at the UK-based investment platform, AJ. Bell. He joins me now. Welcome.

**Russ Mould** (4:02)
Thank you, Nova.

**Novasafo** (4:03)
So let's name some of the companies we've now heard from that beat expectations. CoreWeave, Foxconn, Supermicro Computer.
Anything standing out to you from all the relatively good news we've heard this week from these companies?

**Russ Mould** (4:17)
The message from all of those companies is that the demand for computing power related to the development of large language models, data centers and artificial intelligence remains insatiable. And that's the message that they're keen to put out, whether you're making as you see, whether you're providing data centers, whether you're providing servers, whether you're providing silicon chips or semiconductor production equipment. And that's the message they're putting out. And I guess what everybody's looking at, also with some interest, is this purported deal involving NVIDIA and a number of private equity companies provide financing to help grease the wheels and provide the money for this considerable amount of expenditure. And that is being seen, I'm sure, by these companies as a good deal, because it provides the financing, as and when it comes through, if as and when it comes through. Equally, there are still a few skeptics out there who are raising questions about, well, is it a deal or is it a memorandum of understanding? Why aren't the banks getting involved? Does this look so juicy? And doesn't it ultimately mean that the biggest spenders, OpenAI, Anthropic, does it actually mean that they don't really have the enough money themselves to fund this stuff so they're relying on others, which isn't necessarily a brilliant thing over the long term unless they start to prove to people they can get a return on these colossal investments.