ALTERNATIVE MARKETS UPDATE – MID DECEMBER 2025 & Views for december by macro eagle

Artificial intelligence has become a central pillar of global technology investment, reshaping capital allocation across both public and private markets. The rapid scaling of large-language models, enterprise AI deployment and data-intensive applications has driven a sustained surge in demand for compute, storage and network capacity. As a result, capital has increasingly concentrated around the physical infrastructure required to support AI at scale, elevating data centres from a cyclical IT spend category to a structurally strategic asset class within the global investment landscape.
From a market perspective, global data-centre investment reached approximately $290 billion in 2024 and is forecast to rise to around $490 billion in 2025, implying growth of close to 70% YoY. This acceleration materially outpaces broader IT spending and reflects a sharp increase in capital intensity rather than just incremental capacity additions. Looking further ahead, industry estimates suggest the market is set to expand at around 23% compound annual growth rate through 2030, underpinned by sustained hyperscaler capex, accelerating enterprise demand for AI-enabled workloads and continued geographic expansion of compute infrastructure.

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RESEARCH PERSPECTIVE VOL. 265 December 2025 Alternative Markets Update Artificial intelligence has become a central pillar of global technology investment, reshaping capital allocation across both public and private markets. The rapid scaling of large-language models, enterprise AI deployment and data-intensive applications has driven a sustained surge in demand for compute, storage and network capacity. As a result, capital has increasingly concentrated around the physical infrastructure required to support AI at scale, elevating data centres from a cyclical IT spend category to a structurally strategic asset class within the global investment landscape. From a market perspective, global data-centre investment reached approximately $290 billion in 2024 and is forecast to rise to around $490 billion in 2025, implying growth of close to 70% YoY. This acceleration materially outpaces broader IT spending and reflects a sharp increase in capital intensity rather than just incremental capacity additions. Looking further ahead, industry estimates suggest the market is set to expand at around 23% compound annual growth rate through 2030, underpinned by sustained hyperscaler capex, accelerating enterprise demand for AI-enabled workloads and continued geographic expansion of compute infrastructure. This investment wave is increasingly concentrated among the largest technology platforms, with hyperscalers collectively accounting for an estimated $300–400 billion in annual capital expenditure, the majority of which is directed toward data centres and AI-related infrastructure. Recent flagship projects highlight both the scale and geographic breadth of this build-out: Alphabet has committed $40 billion to expand data-centre capacity in Texas to support Google Cloud and AI workloads. Meta is also deploying multi-billion-dollar investments into large-scale AI-optimised data centres in Texas. Amazon and Microsoft also have announced substantial data-centre expansion programmes totalling nearly $20bn in India as part of broader efforts to scale cloud and AI capacity in high-growth markets. Taken together, these projects underscore how a relatively small group of global technology leaders is driving the bulk of incremental data-centre investment, reinforcing the structural nature of the current capex cycle. Building on the infrastructure capex cycle driven by hyperscalers, venture capital investment in AI has accelerated sharply at the application and model layers. In 2025, generative AI funding grew by approximately 65% year-on-year to nearly $87 billion, underscoring the scale at which private capital continues to back AI-native companies despite a more selective broader VC environment. By the third quarter of 2025, AI-focused investments accounted for more than half of total global venture fundraising, highlighting a level of capital concentration rarely seen in prior technology cycles and reinforcing AI’s position as the dominant growth theme in private markets. This momentum has been defined by a small number of outsized mega-rounds: xAI raised a multi-billion-dollar financing in 2025 at an implied valuation of approximately $200–230 billion, positioning it among the most valuable private technology companies globally; Anthropic secured a multi-billion-dollar investment round at an implied valuation of around $60 billion, reflecting sustained investor conviction in frontier foundation models; and Databricks completed a large late-stage raise of several billion dollars at an implied valuation of roughly $45–50 billion, underscoring strong demand for AI platforms embedded in core enterprise data and analytics workflows. Valuations across both private and public AI-exposed companies have reached historically elevated levels, reflecting expectations of transformative long-term growth rather than near-term profitability. In the private markets, many leading AI-native companies continue to operate at substantial losses as they prioritise model development, compute access and talent acquisition. Firms such as OpenAI and Anthropic are widely understood to be generating rapidly growing revenues while simultaneously incurring multi-billion-dollar annual cash burn driven by training costs and infrastructure usage. This dynamic has drawn frequent comparisons to the late-1990s dot-com cycle, where capital flowed aggressively into companies with compelling narratives but limited visibility on sustainable margins. However, a critical distinction from the dot-com era lies in the balance sheets underpinning today’s AI ecosystem. Unlike the largely unprofitable incumbents of the past, the current cycle is being anchored by highly profitable large technology platforms with strong free-cash-flow generation across cloud, advertising and consumer services. These companies possess the financial capacity to absorb prolonged investment cycles and subsidise ecosystem development, effectively acting as capital providers of last resort for the AI value chain. For investors, this reduces systemic risk at the infrastructure and platform level, even as valuation dispersion and execution risk remain elevated among emerging AI-pure-play companies. Macro Eagle: Views for December (and 2026) by Bobby Vedral I – November RECAP AI angst (Oracle -23%, Palantir -15%, Nvidia -12%), crypto-crash (Bitcoin -30% from October highs) and hawkish Fed speak made November look very shaky, with Wall Street’s Retail Army getting hammered … only to be saved in the last week by (1) dovish talk from Fed Williams & Waller and (2) economic data misses, which brought a December Fed cut back on the table – see graph. This is the time of the year when everybody publishes their 2026 outlook. What strikes me is the contrast between bank research departments’ rosy outlooks versus their more negative bosses (Jamie Dimon/JPM: “looks like entering bubble territory”) or IMF-like organisations (US Tech at “stratospheric valuations”). Probably a reflection of “furious deal-making” at the tactical level (and wish to get paid at year-end) vs. caution at the strategic level (and wish to survive). II – November Top 10 (1) The longest ever US government shutdown ended on Nov 13th – left graph. (2) The Bureau of Labour Statistics cancelled the October Job data report, the first forgone monthly report ever. (3)  Bitcoin lost 1/3 of its value between Oct 6th and November 22nd – it’s biggest market value loss ever. (4) US Consumer Sentiment fell to near lowest on record. (5) The Challenger layoff announcements surged to a 22 year high. (6) Silver hit a new all-time high – right graph. (7) Zohran Mamdani was elected mayor of New York, the first to win over a million votes since John Lindsay in 1969. (8) Answering a question on Taiwan, Japan’s new PM made the country’s first overt threat of force in 80 years. (9) Hong Kong witnessed the world’s deadliest residential building fire since 1980, with 159 people killed. (10) The G20 summit was held in South Africa, the first ever in an African country.  III – December PREVIEW With economic data still suffering from shutdown induced “statistical fog”, December’s main events are front-loaded: Oracle results (Dec 9th) and Fed’s widely expected 25bp cut (Dec 10th). That will be followed by a final central bank blitz next week: BOE cuts 25bp, ECB on hold and BOJ hikes 25bp.  Bessent had raised some hopes that Trump might nominate the next Fed Chair this side of Xmas, but then Trump flagged early Jan. Odds are on Kevin Hassett, but with DJT you never know (he probably doesn’t know either and makes it up on the go – FAFO). In politics, Chile (Dec 14th) joins Argentina/Bolivia turning right, after an anti-establishment left failed to deliver either security (immigration) or growth. Then its Merry Christmas and Happy New Year 2026 to all. IV – The Year Ahead 2026 It’s all about the US mid-terms. DJT will optimise his position by (1) bending the Fed to his will, replacing Powell with Hassett; (2) create incentives to keep Treasuries yields down; (3) react to negative SCOTUS “merit rulings” with pre-planned countermeasures; (4) bring oil down through regime change in Venezuela and security guarantees for the Gulf; (5) win the Nobel Peace Price by ending the War in Ukraine – although with a “frozen conflict” style outcome like Cyprus 1974, rather than the “land-for-sovereignty” outcome of Finland 1940.  As for China, the key events are: (1) the NPC and the publication of the 15th five-year economic plan in March; (2) leadership moves/purges ahead of the 16th Congress in 2027; and (3) the November APEC meeting in Beijing. In Europe, we have (1) general elections in Hungary, where Orban is the underdog for the first time; (2) local elections in the UK, which could lead to Prime Minister change; (3) local elections in Germany, which could lead to the first AfD Land government. (4) Likely parliamentary election in France, with the potential for a “co-habitation” between Macron and Bardella (RN). Markets wont like that. Otherwise, key elections in (1) Brazil, where I think the right will take out Lula – just like in Argentina/Bolivia/Chile; and (2) Israel, where Netanyahu will probably retire in exchange for a presidential pardon.  Last but not least: Men’s T20 Cricket World Cup (Feb/March) and of course the Football World Cup (June/July). Forecast: “It’s coming home!” V – US: Tech & AI Angst Tech stocks in November got hammered (left graph). Given Tech’s weight in the market portfolio (middle graph) and US households record exposure to the stock market, that matters for the economy. Notice: the nascent “differentiation” among BigTech (right graph).  Three things I will be focusing on: First - the evidence on productivity gains (and revenues) that the staggering data-centre capex spending requires. News like (1) MIT finding that 95% of corporate GenAI projects fail; (2) Census Bureau finding a slowing in the  AI adoption rate; and (3) Sam Altman losing his cool during a podcast when asked about OpenAI’s Spending/Revenue ratio on Nov 3rd don’t help. Second – the ultimate “AI winners” aren’t clear. Musk’s $1trn pay deal (Nov 6th) highlights “key people” risk. AI firms poach from each other like there is no tomorrow, and new firms are launched all the time. The MSFT/NVDA backing Anthropic on the same day that Google launched Gemini-3 powered by its own TPUs (Nov 18tH) shows how quick the game can change for the market leader (OpenAI and NVDIA).  Third - the socio-political reaction to those winners. There is an inherent conflict between (1) BigTech proclaiming that AI and robots will replace all jobs; (2) corporate CEOs liking to take credit on earnings calls for AI induced job losses; and (3) voters/politicians starting to worry about their own prospects.  This is going to get spicy.  VI – EUROPE: Debt Doom Loop and Managed Decline Yes, European equities had a great run – but they don’t reflect Europe’s economic state, where the debt dynamics are similar to the US, with the slight difference, that Europe isn’t growing. In fact, it is a kaleidoscope of dysfunction, featuring countries with “a plan but no political majority” (France); those with “political majority but no plan” (UK); and others structurally unable to reform (Germany).  Ever growing social spending (pensions, benefits, vote buying dressed up as “compassion”) and politician’s bias to declare everything as “existential” (bank bailouts, pandemic stimulus, green subsidies, defence spending) has left most big countries with much debt and few options: (1) growth – not there. (2) debt – too high. (3) Spending – political no starter. (4) Inflation – hated by voters. That only leaves: (5) higher taxes and (6) financial engineering – both of which are useful for short-term political survival but guarantee medium-term economic decay.  A key trend in 2026 will be the exodus of taxpayers and investors from countries in “managed decline” mode (high debt, high taxes, low government effectiveness) to countries with a “plan” (low debt, low taxes, high government effectiveness) – see right graph. The former (UK and France) might need to prepare for a fiscal accident. The latter will do very well. VII – ASIA: China, India and Japan China is in a strong position with strong momentum: (1) in a power-hungry AI world, it generates 1/3 of the world’s electricity. (2) With its monopoly of rare earths refining capacity it has significant leverage in any trade war. (3) It already enjoys technological superiority in Green Tech. (4) It is highly competitive in AI – see Deep Seek; (5) It is the largest developer of new medicines – a key “soft power” industry. (6) It even does well in consumer products – see Tiktok and the craze for Labubu dolls. (7) In capital markets Hong Kong/Shanghai are second only to the US in 2025 IPOs, while London doesn’t even make into the top 20 anymore. Yes, there are issues (real estate, consumption, trade imbalances), but the country has momentum. Watch the details of the next five-year plan in March.  At the same time, India will become the world’s fourth largest economy in 2026 overtaking Japan and coming within striking distance of Germany. Modi announced the biggest overhaul of labour laws in India since independence (Nov 21st), described by a knowledgeable friend as “the mother of all reforms”. This looks interesting. I’m definitely visiting in 2026. Japan is back. On the one side, the country has the necessary sense of urgency and never lost its manufacturing edge, as might be evidenced by the production of cutting edge 2nm chips in late 2026 (Rapidus). On the other, it wants to be back geopolitically: PM Takaichi’s comments on Taiwan (Nov 7th) didn’t look like an accident to me.   VIII – My BRO (= binocular of risks and opportunities) Most has already been discussed above and the graph below should be self-explanatory. Geopolitically, the price for “most likely accident” still goes to the South China Sea (SCS) as an increasing naval presence (China, Taiwan, US, Japan, Philippines, Vietnam, France, Australia) and some aggressive vessel handling especially in the Scarborough shoals doesn’t make for a safe chemical mix. On Oct 26th a USS Nimitz helicopter went down in the waters of the SCS. Hours later an F-18 crashed too. Nobody is saying what happened apart from “technical failure”. Sure.  IX – PORTFOLIO There is some hope for a tactical “Santa Rally” out there, but I’m not joining in as 2025 by all standards (see middle graph) has already done very well.  My strategic portfolio is positioned as always: long “real assets” (equities, commodities, real estate) governments can’t print; long Europe based global champions on valuation; increasing exposure to Emerging Asia and Latam; cash and short-term bills. Avoiding US Tech, credit (spreads too tight) and anything with long duration, leverage or illiquidity. I wish you all a great December, Merry Christmas, a Happy New Year 2026 and as always: MAY THE MARKET BE WITH YOU! Bobby The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Stone Mountain Capital LTD. Readers should refer to the Disclaimer. Bobby Vedral MacroEagle E : [email protected] M : +447899996595 Bobby is a macro-political analyst who runs his own fund MacroEagle. 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