The data center boom is driving the earnings of staid industrial companies in addition to the makers of chips and servers.

Why it matters: The newfound importance of AI to companies that make paint, asphalt and industrial cable mirrors the buildout's growing role as a driver of the "real economy."

The latest: Second-quarter GDP numbers released yesterday showed that investment in information-processing equipment and software contributed almost half a percentage point to the U.S. economy's 1.5% growth rate.

Between the lines: These numbers include investments in servers and chips, the costliest parts of a data center. But they don't capture the full scope of the AI boom, which also involves titanic amounts of spending on less sophisticated products.

Case in point: Paint maker Sherwin-Williams knocked earnings out of the park earlier this week, sending its stock up 8.3% on Tuesday — its biggest jump in over four years — despite continued weakness in U.S. housing, which usually drives its numbers.

• AI supercharged sales growth of the company's "protective and marine" coating products, which grew in the "mid-teens," the company said, far higher than its overall 7.5% sales growth during the quarter.
• "When we talk about AI data centers and the build-out, you think of the race of these hyperscalers," said Heidi Petz, Sherwin-Williams' CEO, adding that "speed matters, and we can provide speed. We can provide a comprehensive one-stop solution for many of their coatings needs."

Zoom out: Sherwin-Williams isn't alone.

• Wire and cable distributor WESCO International soared yesterday after trouncing expectations for sales and earnings. Sales at its data center solutions division jumped 45%.
• In its earnings call on Wednesday, the CEO of industrial coatings maker PPG told analysts "there's quite a pipeline in data center work which is not only fire protection, but structural steel flooring, insulated coatings [and] dielectric coatings."
• Shares of industrial conglomerate 3M — which makes hard hats, industrial adhesives and sandpaper, in addition to Post-it notes — notched their best gain of the year last week, after the company spotlighted that Microsoft was using its patented fiber optic cable connectors in its Azure data centers.
• Asphalt and aggregate companies Vulcan Materials and Martin Marietta Materials both spotlighted data center-related demand in their earnings results this week, with executives at Vulcan telling analysts that "large project opportunities continue to drive non-residential activity, particularly data centers."

The big picture: With the hyperscalers alone — Amazon, Alphabet, Meta, Microsoft and Oracle — expected to spend more than $750 billion on AI capex this year, there are plenty of profits to be had in the U.S. economy.

The bottom line: As AI becomes an important line of business outside the tech world, it means that more companies will enjoy some of the fruits of the spending frenzy.

• But it also means those companies — and the U.S. economy — will be more exposed to risks and volatility that accompany the boom.

The AI job apocalypse may need a rebrand — a new white paper finds that rather than triggering full-scale job losses, the new technology is slowing wage growth, especially among lower-paying occupations.

Why it matters: In other words, you get to keep your job, but you'll make less money doing it.

Where it stands: Workers in occupations with high AI exposure had real wage growth that was 6.7 percentage points lower than that of those in low-exposure fields after 2023, the first full year after the rollout of ChatGPT.

• That's according to the report from economists Sania Edlich and Torsten Slok at the investing giant Apollo Global Management.
• Affected workers lost out on $28 billion annually as a result.
• Workers at the bottom of the income ladder saw wage growth decline more than those at the top, they found.

How it works: Apollo used Labor Department wage data to compare pay in 11 occupations with high AI exposure, as measured by Anthropic's Economic Index, to those with less exposure.

• Those occupations include computer programmers, customer service reps and financial analysts.
• Apollo says around 5.8 million U.S. workers, or about 3.7% of the labor force, are currently in high-exposure occupations.

What to watch: "As AI adoption deepens across corporate America, the true number of workers feeling these effects could grow substantially beyond what current exposure measures capture," the paper's authors wrote.

Reality check: The number of AI-affected jobs may understate the trend, and is based on just Anthropic's analysis.

The big picture: It's not a good time for slowing wage growth — higher costs are eating into Americans' paychecks and savings.

• Spending rose faster than income last month and savings declined, according to data out yesterday from the Bureau of Economic Analysis.

Between the lines: Intuitively, the findings make sense. Over the past year, executives at many companies have talked endlessly about AI's potential to replace human workers.

• That could scare workers away from demanding higher pay or job-hopping.
• The quits rate, a measure of workers voluntarily leaving their jobs, is now comparable to mid-2010s levels.

Friction point: Slower wage growth is the kind of thing that Wall Street paints as positive. It means slower inflation more broadly and eases pressure on the Federal Reserve to raise rates.

• Still, for those who like pay raises and are struggling with higher prices at the supermarket and gas station, it's less than heartening.

Microsoft had a day for the record books yesterday— its stock rose 16%, the biggest jump for the tech giant in nearly two decades.

• The resulting surge in market cap — $450 billion — was apparently the biggest one-day gain in stock market history, per Bloomberg's analysis.

Between the lines: Investors were grooving on the company's latest earnings report and the powerful growth of the Azure cloud computing business — a sign that its AI investments are paying off.

The bottom line: The cloud business is making it rain over in Redmond, Washington.