More signs of growth across AI and Europe

Europe is showing tentative but uneven improvement, while AI investment is becoming an increasingly important driver of U.S. capital spending and growth.

• Germany’s Ifo Business Climate Index rose to 88.8 in August from 86.7 in July, its strongest reading in roughly a year, while German consumer sentiment improved to -26.6 from -29.4.
• The recovery is not broad-based: French consumer confidence stayed at 86 versus a long-term average of 100, and the UK CBI retail sales balance fell to -48 in August from -26 in July.
• U.S. second-quarter GDP growth was confirmed at a 1.5% annualized rate, down from 2.1% in the first quarter, while initial unemployment claims remained low at 203,000, indicating moderation rather than contraction.
• Nvidia’s quarterly revenue rose 106% year over year to $96.2 billion, including $89 billion from data centers, up 117%; it guided to approximately $108 billion next quarter, excluding data-center compute revenue from China.
• The U.S. goods trade deficit widened to $118.8 billion in July from $101.4 billion in June, while capital-goods imports rose 11.3% to approximately $140 billion, nearly 47% above their level a year earlier.

Takeaway: Investors should assess Europe by country and sector rather than as a single trade, and should increasingly judge AI beneficiaries by productivity gains, earnings growth and returns on invested capital rather than spending momentum alone.