Here to talk about 2026, the economy, investment ideas. Great to have back with us the founder, CEO, and CIO of ARK Invest, Cathie Wood. She joins us from Saint Petersburg, Florida. Cathie, great to have you here. Happy New Year.
Happy New Year, Carol and Tim. Very happy to be here again.
Well, it's great to have you here. And I want to start with what stocks did here in the U.S. really well last year. But if you look at global stocks, you could say that there was certainly some underperformance by the U.S. You've invested in a lot of U.S. names, but also a lot outside the U.S. And I think about Chinese companies buoyed by Alibaba. Are you looking for more opportunities outside the U.S. at this point? And I wonder if you think it's time for maybe U.S. stocks to take a little bit of a breather after three years of double-digit gains?
Well, I think we're very focused on the deregulation, lower taxes, and what we believe will be lower inflation, much lower inflation, and lower interest rates in the U.S. And we think that the combination of those is actually going to drive the returns on invested capital in the U.S. up relative to those in the rest of the world. And I think many people are underestimating, especially on the corporate tax side, that thanks to the new depreciation schedules, our effective corporate tax rate, not the statutory, but the effective, will drop to one of the lowest in the world at roughly 10%, certainly near a record low for the U.S.
So do you think, Cathie, that's not priced in yet to U.S. equities? Like, have investors not realized that and therefore it's not priced?
You know, it's very interesting. Maybe a lot of your guests have been talking about the depreciation schedules, how massively they are going to encourage capital investment here in the United States. So we've never had full depreciation in year one of manufacturing facilities, full depreciation in the first year of service. That means corporations will get huge tax refunds that they will be able to reinvest into innovation because we also have equipment, domestic R&D, and software. Those three, full depreciation, first year of service, that has been legislated. Normally we get, oh, a few years of this, you know, this cut, not cut, but that has been legislated now it's all the time. So we don't think people understand how profound some of these tax changes are.
So what does that mean for something like the AI trade, specifically, Cathie, where I think people are worried about pockets of it with, you know, being in a bit of a bubble? Does it benefit everyone who is somehow associated, whether it's the chip companies, whether it's the energy companies? Do you see the benefits playing out there and giving it more room to move to the upside?
Absolutely. Absolutely. I mean, we're having a huge build-out of data centers and power facilities. All of that, all of those depreciation schedules will apply to this boom in investment and contribute to it. So, yes. And in fact, clearly, many people think we're in a bubble. And yes, the data center spending last year was about $500 billion. And you can see all of this in our Big Ideas report. We just released it yesterday. And thank you, Bloomberg, for featuring it. But $500 billion is a two-and-a-half times increase from where it had been trending for years. So big increase, no doubt about it. But we think that number needs to go to $1.4 trillion in the next five years to accommodate the AI boom that is now underway and is going to drive productivity gains incredibly.
I want to get into that in just a moment. I'm really also piqued or interested in the healthcare aspect of it because I feel like there's a lot going on. Before we do, so you, we also have your 2026 outlook. And what's interesting is you note that this is an important economic historical moment. How so?
Okay. Well, we are in a technology revolution, and many people thought that the internet was a technology revolution, and to some extent it was. But today, instead of just one major platform evolving, we have five. So robotics, energy storage, AI, blockchain technology, and multi-omics sequencing in the life science space, which we believe is the most profound application of AI in healthcare. And so this boom, if you look back at the railroad boom, the amount of investment that we saw back then was about 6% of GDP at its peak, 5 to 6%. The internet boom was more like the auto boom in the early 1900s. It was more in the 3 to 4% of GDP range. We believe this five-platform innovation strategy or boom is going to move to 12% of GDP. And we do believe also that productivity growth will accelerate to the 4 to 6% range and be sustained there. Normally, we see a cyclical peak around there and then it falls back. We think it will be sustained. And we think that by the end of this decade, real GDP growth could be averaging more than 7% per year. And I know that sounds shocking given that we've been at 3% for 125 years. But it is the history associated with technology revolutions, a step change up in GDP growth.
