According to a newly released strategic report from Morgan Stanley Wealth Management, the market has entered a “gen-AI-capex-powered” era that represents a rare shift away from consumption-led growth and toward an investment-led “reindustrialization renaissance.” The catch is it’s very unlike previous technological revolutions—such as the internet, personal computers, or mobile devices.

The current generative AI wave is “not obviously consumer-centric yet,” according to Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management. Instead, the build-out is deeply rooted in the physical world to support massive computing needs.

Shalett’s team noted data-center-related investment already accounted for a staggering 25% of annual GDP growth in 2025, and is expanding at a pace that is multiples of forecasted real GDP growth. This immense scale requires trillions of dollars of investment that will ripple through physical markets, directly impacting real estate, construction, power and electricity generation, and industrial metals. The firm argues this dynamic is catalyzing a multiyear period in which “investment dominates consumption as the growth driver amid economic rebalancing.”

About those humans

While this infrastructure build-out is a boon for industrial metrics, the outlook for humans is markedly less rosy. Morgan Stanley warns of “transformational risks to the labor market” brought on by the gen AI diffusion.

The report describes prospects for the U.S. consumer as ultimately “unremarkable,” weighed down by “depressed sentiment, job anxiety, a low 3.6% savings rate, and rising indebtedness and credit delinquencies.” Furthermore, the firm predicts consumption growth will likely stall owing to a lackluster job market, aging demographics, and slow population growth, leaving the populace trapped within “K-shaped economic dynamics” that exacerbate inequality, referencing the meme over the past five years that leaped from finance Twitter and into reality, with the wealthy and working class representing branching lines on the “K,” rather than a “V-shaped” or “U-shaped” financial recovery.

Interestingly, this new paradigm is also forcing a harsh reality check on tech titans. For years, U.S. indexes have been dominated by “asset-light, recurring-revenue tech business models” that enjoyed near-zero marginal costs and ever-expanding margins. However, the gen AI revolution is fundamentally different. It is a “cash-hungry R&D arms race” with marginal-cost economics, meaning as tech companies add subscribers, they must simultaneously spend vastly more on precious “compute” capacity.

Consequently, these former asset-light darlings are transforming into “capital-intensive, cash-flow-hungry businesses.” Morgan Stanley bluntly states that for these hyperscalers, “the era of multiple expansion based on seemingly ever-expanding profit margins is likely over.”

Bank of America Research chief equity strategist Savita Subramanian has sounded similar alarms about tech’s move away from an asset-light model, while Silicon Valley executives are waking up to the fact AI may have ended the tech industry’s profit gravy train, and even automated most coding work.

Ultimately, Morgan Stanley’s vision of 2026 and beyond is one of profound economic realignment. The gen AI revolution may not be delivering a consumer utopia, but it is fueling a global, capex-driven infrastructure boom. It is an era in which heavy machinery, power grids, and data centers reign supreme, fundamentally suggesting that, at least for now, the AI boom is far better for computers than it is for humans.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.