Global Market Snapshot

Market Review

A September stock market to remember

Global equities overcame weak seasonality trends in September, and extended the broad rally that had begun in April. The S&P 500^® gained more than 3.5%, which was the best monthly return for September since 2010, and the fifth straight month of positive returns for the index.

Growth stocks led performance; both the Nasdaq and MSCI Emerging Markets indices returned more than 5%, and the latter continued its streak of positive returns for every month of 2025. Artificial intelligence (AI) continues to be a driving theme for markets with the United States and China as the clear leaders.

At the September Federal Open Market Committee meeting, the Federal Reserve resumed the rate-cutting cycle that had been on pause since December and lowered the fed funds rate by 25 basis points to a range of 4.00-4.25%. Major bond indices posted positive returns for the month as interest rates fell modestly, with the market pricing in two additional rate cuts by year end.

Theme of the Month

Hey big spenders

AI developments have been a tailwind for equities this year and will remain a market force for years to come, in our view. The buildout of digital infrastructure has underpinned global AI investment, particularly by the large U.S. technology companies known as hyperscalers. These hyperscalers (including Alphabet Inc., Amazon.com, Inc., Meta Platforms, Inc. and Microsoft Corp.) provide significant cloud computing services to support internet and digital services.

As the demand for AI large language models (LLM) grows, these firms have been significantly increasing their capital expenditures (capex) in data centers, semiconductor chips and other infrastructure needed to scale AI models. Capex by the major hyperscalers has reached record levels and is projected to approach $350 billion by the end of 2025 and continue its upward trajectory into 2026 (Figure 1). Current estimates indicate approximately 50% of capex spending growth occurred in both 2024 and 2025, which is unprecedented.

Figure 1. Capital Expenditures by the Largest Hyperscalers
Capex has accelerated to keep up with AI and data center demand

As of 9/30/2025. Source: FactSet^®, FactSet^® is a registered trademark of FactSet Research Systems, Inc., and its affiliates.

View accessible version of this chart.

Investors have been rewarding AI-related capex spenders in anticipation of future revenue and growth, and early indications of higher adoption by both consumers and businesses are an encouraging sign of potential revenue and future growth. Data tracked by the U.S. Census Bureau shows that a rising share of businesses across all sectors are currently using AI or are planning to use it soon (Figure 2).

Figure 2. Share of U.S. Businesses Adopting AI
The number of companies using or expecting to use AI to produce goods or services is steadily growing

As of 9/30/2025. Source: U.S. Census Bureau

View accessible version of this chart.

Additionally, data from OpenAI, Inc. reported an acceleration in the number of paying enterprise users this year, which jumped from three million in June, to five million by September. OpenAI also published a joint study with the National Bureau of Economic Research that showed ChatGPT, one of the biggest LLMs, hit 700 million weekly active users in August, quadrupling from a year earlier. The long-term payoff to the surging capex will require real-world results, but we believe today’s global technology market leaders are operating from a position of strength – in terms of both balance sheet and innovation.

Capex spending directly impacts the private, nonresidential fixed investment component of GDP. While consumption is by far the largest component of U.S. GDP, it has been relatively stable over the long term. In contrast, fixed investment can be an underappreciated “swing factor,” significantly adding to (or detracting from) economic growth. Anticipated productivity gains from AI efficiency and automation, job creation from the construction of data centers and updates to power infrastructure necessary for increased demand, all contribute to an uptrend in economic activity. The surge in AI-enabling capex will ultimately prove to have been either essential, or folly, based on the economic and societal benefits of AI, which we believe will be profound and long lasting.

For more information, please contact your PNC advisor.

TEXT VERSION OF CHARTS

Figure 1. Capital Expenditures by the Largest Hyperscalers (view image)
Capex has accelerated to keep up with AI and data center demand

Year	Alphabet Inc.	Amazon.com Inc.	Meta Platforms Inc.	Microsoft Corp.	Total
2015	9915	4588	2523	7142	24168
2016	10183	6736	4491	8247	29657
2017	13164	10058	6733	9895	39850
2018	25139	11322	13915	12788	63164
2019	23548	12690	15102	14668	66008
2020	22281	35046	15115	18074	90516
2021	24640	55396	18567	22267	120870
2022	31485	58321	31431	26014	147251
2023	32251	52729	27266	36298	148544
2024	52535	82999	37256	54658	227448
2025E	81960	116182	68208	77262	343612
2026E	91290	125896	94940	93266	405392

As of 9/30/2025. Source: FactSet^®, FactSet^® is a registered trademark of FactSet Research Systems, Inc., and its affiliates.

Figure 2. Share of U.S. Businesses Adopting AI (view image)
The number of companies using or expecting to use AI to produce goods or services is steadily growing

Date	Currently using AI	Plan to use AI in the next 6 months
11/2023	4.40%	6.90%
3/2024	4.40%	6.70%
6/2024	5.00%	6.80%
10/2024	6.00%	9.00%
2/2025	7.30%	9.80%
6/2025	9.30%	11.70%
9/2025	9.90%	14.00%

As of 9/30/2025. Source: U.S. Census Bureau

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Global Market Snapshot - October 2025

Market Review

Theme of the Month

Important Legal Disclosures and Information