Summary of J.P. Morgan Global Capex Survey Industry Overview - The report focuses on the global capital expenditure (capex) trends across various industries, particularly highlighting the data center (DC) and AI-related end markets. [1][4] Key Findings Capex Growth Projections - Global capex is projected to increase by **10% year-over-year (yoy)** in **2025**, which is **2 percentage points higher** than previous estimates. [1][4] - The **Internet, Media, and Services** sector is expected to lead this growth with a **55% yoy** increase, up **16 percentage points** from earlier estimates. [1][4] - For **2026**, global capex is expected to grow by **1% yoy**, a recovery from the previous estimate of **-1% yoy**. [1][4] Sector-Specific Revisions - **2025 Revisions**: - Positive: - Internet Media & Services: **+16pp to +55% yoy** - Iron & Steel: **+9pp to +2% yoy** - Industrials: **+7pp to +12% yoy** - Negative: - Automotive: **-4pp to -1% yoy** - Chemicals: **-3pp to -4% yoy** - Consumer Products: **-1pp to +1% yoy** [4] - **2026 Revisions**: - Positive: - Internet Media & Services: **+12pp to +17% yoy** - Semiconductors: **+6pp to +6% yoy** - Utilities Power Generation: **+3pp to +1% yoy** - Negative: - Discretionary Retail: **-3pp to flat yoy** - Automotive: **-2pp to -1% yoy** - Cement and Aggregates: **-2pp to -3% yoy** [4] 2027 Capex Outlook - The first look into **2027** indicates continued strength in AI-related markets, with expected growth in: - Internet Media & Services: **+7% yoy** - Utilities Network: **+4% yoy** - Discretionary Retail: **+4% yoy** - Sectors expected to cut capex the most include: - Iron & Steel: **-6% yoy** - Mining: **-5% yoy** - Pulp & Paper: **-3% yoy** [4] Implications for WEG - The survey results are viewed positively for **WEG**, indicating higher expected spending in AI-related markets until **2027**. [1][4] - WEG has announced investments of approximately **R$5.3 billion (~US$980 million)** over the past two years to expand production, including doubling transformer capacity and entering the high-voltage motor segment. [1][4] - The capex survey's correlation with WEG's foreign revenue growth has decreased to **~80%** from **~90%** in 2023, indicating a potential shift in market dynamics. [5] Additional Insights - The survey covers around **3,900 listed companies** across **19 end markets**, representing approximately **US$3.4 trillion** of capex. [1][4] - The report highlights the importance of monitoring commodities-related sectors, which could negatively impact revenues in Industrial Electro-Electronic Equipment. [1][4] Conclusion - The J.P. Morgan Global Capex Survey presents a bullish outlook for capital expenditures, particularly in sectors related to AI and data centers, with significant implications for companies like WEG. The findings suggest a recovery in capex growth, particularly in the Internet and Utilities sectors, while caution is advised for sectors like Automotive and Chemicals. [1][4][5]

Investment Rating - The report maintains a "Buy" rating for Prysmian (PRY IM) with a target price of EUR74 and Emerson Electric (EMR US) with a target price of USD153, indicating positive investment opportunities in the capital goods sector [7][15][76][77]. Core Insights - The HSBC Global Composite Capex Lead Indicator declined to -30 in May 2025 from -7 in March 2025, reflecting a slowdown in global capital expenditure due to tariff volatility, although some sectors showed improvement [7][21]. - The FTSE World Industrials Index has shown resilience, increasing by 9% quarter-to-date despite geopolitical uncertainties and tariff-related challenges [7][14]. - The report highlights a potential for positive performance in the FTSE World Industrials over the next six months, supported by a reading of -30 in the lead indicator [7][21]. Summary by Sections Global Capex Outlook - The report forecasts global capex to reach approximately USD3.9 trillion in 2025, with sectors like Software, Airlines, and Computer Hardware expected to lead growth [23][24]. - The capital goods sector is experiencing varied performance across regions, with EMEA showing improvement while APAC and the Americas faced declines [7][31][35]. Regional Analysis - **Americas**: The capex lead indicator declined marginally to -36 in May 2025, with mixed performance across sectors; manufacturing improved while construction and utilities declined [31][32]. - **EMEA**: The capex lead indicator improved to -11 in May 2025, driven by early-cycle improvements in manufacturing and transport [33][34]. - **Asia Pacific**: The capex lead indicator fell to -40 in May 2025, primarily due to a significant decline in mainland China, although Japan showed some improvement [35][36]. Subsector Performance - **Manufacturing**: The lead indicator improved to +13 in May 2025, with positive trends in the Americas and EMEA, while mainland China declined [43][44]. - **Utilities**: The lead indicator rose significantly to +45 in May 2025, indicating strong growth in solar and gas generation investments [56][57]. - **Consumer**: The lead indicator improved slightly to -56 in May 2025, with low-level improvements in the Americas and EMEA, while Japan and mainland China saw declines [58][59]. Stock Recommendations - **Prysmian**: The company is well-positioned to benefit from US electrification trends and has a strong demand outlook in the T&D segment, justifying a Buy rating [68][69]. - **Emerson Electric**: The company is expected to benefit from a transformation towards automation and improved margins, leading to a Buy rating with a target price of USD153 [76][77].