Market Update: We break down the business implications, market impact, and expert insights related to Market Update: How will AI impact the economy and what it could mean for Memphis – Full Analysis.
Arkansas Gov. Sanders speaks on new West Memphis Google Data Center
Arkansas Gov. Sarah Huckabee Sanders spoke on the new West Memphis Google Data Center during an announcement event on Oct. 2, 2025.
The Greater Memphis Chamber hosted its 2026 State of the Economy event on Feb. 17 at the Memphis Botanic Garden.
Keynote speaker David Waddell, Waddell & Associates CEO and chief investment strategist, provided an outlook on the economic climate and AI’s impact on the economy.
Here are some key takeaways from the event.
How did the national economy fare in 2025?
For Waddell, 2025 was a year of “solid growth” for the national economy.
“Any calibrations of your expectations for 2025 had to start with a calibration of what your policy expectations were from Donald Trump,” he said.
Waddell explained concerns about Trump’s tariff policies caused pessimism, uncertainty and volatility in the economy. “The level of fear within the stock market only rivaled that during the great financial crisis and COVID,” he said.
However, Waddell said last year that the Trump administration did lower taxes and interest rates, adding gas prices and inflation fell throughout the course of 2025. He noted the the Gross Domestic Product (GDP) in 2025 grew in the second, third and fourth quarters to an overall 3% annual growth rate after a negative first quarter.
Additionally, Waddell stated that tax refunds this year will be up 20% on average with the average refund being $2,300 so far through early February.
“It’s not like we’ve grown like we’ve never seen before, but it ain’t that bad,” he said. “… Love him or hate him, whatever the Trump agenda was and it was crazy, at least for the year 2025, we had solid growth and household net worth overall probably went up 15%.”
How will AI reshape economic landscape? What does it mean for Memphis?
Before Waddell spoke, Memphis Chamber president and CEO Ted Townsend touted the city’s reputation as part of the Digital Delta, which is an initiative designed to turn the Memphis area into a global AI and technology leader. Townsend pointed out recent announcements of xAl’s plans to invest $20 billion in Southaven to expand its Mid-South presence and Google’s plans to invest $4 billion in a data center project in West Memphis.
Waddell said Memphis has gotten out in front of the “AI age.”
“I remembered I was in the room when we coined the Digital Delta idea and that was far before any of this really became mainstream,” Waddell said. “But what it did was it put an open for business sign on Memphis, Tennessee. We put a flag in the ground and said, ‘We are going to be open for business in the digital economy.’ What’s happening nationwide and worldwide is an absolutely industrial revolution.”
During a Feb. 12 interview with The Commercial Appeal, Waddell shared some background on the topic. Waddell described the growth of artificial intelligence as the “most rapid and profound change in human history.”
For him, that rapid change does fuel some polarization. For as fast as the sector has grown, and the benefits some companies and communities are seeing, there is a warranted concern with infrastructure and regulations.
For Waddell, he still sees the current landscape in the U.S. as a “digital industrial revolution.”
Waddell acknowledged that the industry has seen upward of $500 billion invested in it since last year, and has seen a significant spike in gross domestic product (GDP) contributions.
A January 2026 report from the Federal Reserve Bank of St. Louis highlighted some of the key growth metrics driven by artificial intelligence last year. The industry’s spending on software and equipment accounted for nearly 90% of the GDP in the first quarter of 2025. However, those figures did trickle down over the course of the year. Still over the first three quarters of 2025, artificial intelligence investment was responsible for nearly 40% of the nation’s GDP, according to the report.
Naturally, such a pace is not sustainable, and it is a warning sign that Waddell acknowledged, going as far as saying that the industry’s historic growth will lead to big winners and consequently very big losers.
“Who knows who the winners and losers will be?” he said during the Feb. 12 interview. “But they’ll be an Enron in all of this… they’ll be spectacular failures in all this.”
For Waddell, the investment in artificial intelligence is akin to a train that’s already left the station. He sees it as inevitable so the communities that are already on the train, such as Memphis, are in the driver’s seat. He believes such communities are positioning themselves to benefit from the surge of investment.
When asked about regulations on the industry, he cited how other communities have issued restrictions or moratoriums, noting such limitations are fine. Most of the pushback on artificial intelligence and data centers has been due to pollution concerns and water usage. In Memphis, xAI has been the catalyst for criticism toward air and noise pollution with its facilities in Boxtown and Southaven.
When asked about these concerns, Waddell said companies have the capital expenditure to fix such concerns and would likely do so, adding that xAI is paying for the construction of an $80 million greywater facility near its Colossus data center in Memphis.
For the communities pushing back and adding moratoriums, though, Waddell does believe those communities are limiting their chance and access to the leading industry in the country. From an economic standpoint, he does not believe that is advantageous.
“There’s never been a cycle like this,” he said. “It is the wild, wild west.”
Reporter Neil Strebig contributed to this report.
Corey Davis is the Collierville and Germantown reporter with The Commercial Appeal. He can be reached at Corey.Davis@commercialappeal.com or 901-293-1610.