SustainAbility: A walk down US industrials

There are a lot of debates about the health of the US economy with many arguing that the strength of equity markets driven by artificial intelligence (AI) hides cracks in the ‘real’ economy.

Hyperscalers – the large cloud computing companies such as Meta and Alphabet – are expected to spend $370bn in capital expenditures this year, a significant increase over last year, and some economists have argued US GDP growth without this would be flat. Meanwhile, US housing market has been weak as high mortgage rates and high house prices are impacting activity. Freight shipping, a sign of economic activity, has also remained lacklustre in 2025. In short, the picture is relatively uneven, and this is creating a dilemma for the Federal Reserve on whether to cut or hold rates steady.

Notes from the US: good, bad and ugly

We recently attended a large industrial conference in Chicago, meeting lots of US companies and it was a good opportunity to get an update directly from them. The good news is that data centre investment is having a profound positive impact on US supply chain and energy production; if the US reindustrialises, we might look in the future as datacentre being the trigger. The bad news is that the general economic environment remains weak. The ugly news is that housing sector in a very tough spot and hard to see the catalyst for improvement.

However, in overall terms (except for the housing exposed companies), there is an ongoing sense of optimism, although more stability on trade tariffs would help. This is a feature of US companies: culturally these tend to be at the more positive end of the spectrum and are also more willing to experiment and take risk. There is no better example than GenAI adoption; while European companies are cautiously experimenting, US companies are almost evangelical about it. As always, the truth is probably somewhere in the middle, but we are reminded that being an optimist is a good trait in life. 

The good news is that data centre investment is having a profound positive impact on US supply chain and energy production.

Finally, we are being asked a lot if sustainability is unfashionable (or dead!) especially in the US. It is true many companies have dialled down their commitments over the past 12-18 months. However, sustainability was never about loud speeches or flashy commitments: it is about embedding into day-to-day practices. One CEO of a medium-sized industrial company illustrated that well to us. They operate in an industry facing a chronic shortage of skilled workers and their commitments to sustainability – particularly around safety and fair treatment of workers – make them an employer of choice to attract and retain talent. This hopefully translates into a competitive advantage and long-term financial performance.

Quantum, quantum, quantum

The optimism we have mentioned above is also reflected in innovation, with the US market still leading the way when it comes to backing up new trends with high levels of investment. Of course, all eyes are on AI, but new emerging trends are finding favour with investors. The one that caught our eyes has been the rise of quantum stocks this year. Quantum computing entails moving from ‘bits’ that are either 0 or 1 in traditional computing, to ‘qubits’ which can exist in a position of 0 and 1 simultaneously, enabling significant improvement in computing capabilities.

The potential of quantum computing is high, but we feel the technology remains very early stage and most pure play companies have little to no revenues let alone profits. For quantum computing we are getting exposure through the likes of Alphabet – their Willow chip demonstrated a verifiable quantum advantage, being 13,000× faster than the best classical supercomputer for a specific algorithm and is being integrated into Google Cloud. Our process looks favourably to innovation as we believe it is the key driver of economic and profit growth; however, we tend to find the most boring ways to play an exciting trend, to mitigate the risk of more speculative areas.

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