Wall Street is already looking past what’s expected to be Corporate America’s slowest gain in quarterly earnings in a year, instead focusing on a number that rarely captures the limelight: capital expenditures.

As President Donald Trump’s on-again-off-again tariff regime keeps investors wondering what comes next, they’re turning their attention to the pace at which the companies that propel the economy are spending to build their businesses. The hope is that their stance on big expenditures, like real estate or major machinery, will offer clarity into how they see the economy.

“I don’t think businesses can spend cash in a time like this,” said Scott Ladner, chief investment officer at Horizon Investments. “It is not an environment in which they can operate as usual, so they become very conservative. It is a wait-and-see situation.”  

The early signs confirm Ladner’s thinking. This week, JB Hunt Transport Services Inc., a transportation industry bellwether, cut its capital expenditure plan for the year, following a similar move last month by FedEx Corp. Meanwhile, United Airlines Holdings Inc. laid out two possible earnings scenarios — one if there’s a recession and another if it’s avoided — yet in both cases its long-term investments were below prior expectations.

“The first quarter is already old news, even more so this time because things have changed so dramatically this month and look to change even further in the months ahead,” said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. “We are looking very carefully at the guidance that firms come out with, especially from industrials and materials.”

Pessimism builds

Recent economic surveys add to the pessimism. Data from the Federal Reserve banks of Philadelphia, New York, Richmond and Dallas all show that manufacturers’ plans for capital spending fell in the first quarter. The March NFIB small business optimism survey — which typically has a pro-Republican bias — fell below its 51-year average. And a poll by Chief Executive magazine conducted earlier this month found that just 26% of the 329 corporate leaders who participated planned to increase their capital expenditures, down from 36% in March and 56% in January. 

Meanwhile, overall industrial production fell in March for the first time in four months. An economic model from Goldman Sachs Group Inc. found that higher policy uncertainty and tighter financial conditions will likely exert a four-percentage-point drag on quarterly annualized growth in capital expenditures.

“Guidance in this quarter is going to be both hard to give and hard to trust,” said Raheel Siddiqui, senior strategist at Neuberger Berman. “Company guidance is relevant when they have visibility, but right now no one has visibility.” 

Investors already had their eyes on spending at the biggest companies in the S&P 500, known as the Magnificent Seven, which poured billions into the development of artificial intelligence functions while driving the market’s gains for the past two years. Those companies — Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. — are expected to continue spending on developing AI this year, but Microsoft’s sudden decision to pause work on data centers in Ohio shows that doubts about the value of those expenditures are emerging. 

Trump’s tariffs are also expected to weigh on spending by Big Tech firms, which are at the heart of the global economy. And if the trade war triggers a recession, their spending on AI is seen at risk.

“I expect CEOs around the country are playing out what they will do if there were a recession, where to pull back, and that is where that AI spending comes in question,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Co. “If you truly have an economic pullback, AI spending will not be insulated.”

Meanwhile, next week’s earnings from manufacturing heavyweights Caterpillar Inc., General Electric Co. and Boeing Co., telecommunications behemoth AT&T Inc. and chemical major Dow Inc. should provide a read into whether major US companies beyond the Magnificent Seven are investing in growth.  

Most vulnerable companies

The economic uncertainty spurred by Trump’s incoherent tariff plans is bad for all businesses. But the most vulnerable companies right now are in capital-intensive industries that also have international trade exposure, analysts and strategists said. Manufacturers of computers, electronics, appliances, machinery, petroleum products and chemicals will likely have the most gloomy updates, and transportation companies will feel the pinch as consumer demand takes a hit, they added.

“The first casualty in the trade war is likely to be CEO confidence,” said Deane Dray, co-head of global industrials research at RBC Capital Markets. “Once that is compromised, then you get project delays, longer approval times, and that leads to cancellations and capex cuts. Since what is capex for one is revenue for another, there is then this cascade effect, and you start seeing capex cuts more broadly.” 

Dray expects some manufacturers to suspend guidance due to the uncertainty surrounding trade. Companies like industrial distributor Wesco International Inc., engineering technology provider Fortive Corp. and 3M Co., which makes Scotch tape and Post-it notes, remain most exposed to the turmoil, he said.

The outlook from trucking and logistics companies, which move goods used by corporations as well as consumers, also will be crucial to watch.  

“Carriers I think are going to start cutting capex,“ said TD Cowen analyst Jason Seidl. “You’re going to see at least mild reductions to capex for this year.” 

Many of the publicly traded truckers are using relatively new vehicles, Seidl noted. “They could easily push the fleet age half a year out,” he said. “That’s not beyond the realm of possibilities at all.”

However, that kind of decision would ripple through the supply chain, where companies that make trucks and their parts — such as Cummins Inc. and Paccar Inc. — will see orders take a hit if shippers hold off on plans to upgrade their trucking fleets.

Of course, there’s still the possibility that the Trump administration’s effort to bring manufacturing back to the US through the use of tariffs will spur some companies to build new factories or expand their businesses, which could help offset at least some of the expected spending declines.

“One way to curry favor with this administration is to do what they are trying to make people do. Which is build manufacturing capabilities in some capacity,” Horizon’s Ladner said. “This is a different kind of virtue signaling, a ‘president signaling.’ See we are doing the things you want us to do.”

This story was originally featured on Fortune.com