Is the AI investment surge supercharging the economy—or merely setting us up for another dot-com repeat? Tech titans are dropping hundreds of billions of dollars on data centers, chips, and cloud infrastructure—with some projections attributing up to 50% of 2025 GDP growth to AI-related spending (PBS). But there’s a catch: much of this growth may be front-loaded—built more on hope than hard revenues.
Spending by the Big 5 tech firms (Amazon, Google, Meta, Microsoft, Oracle) is so colossal that if fully counted, GDP could be 0.4% higher than reported, and their capital expenditures now make up 10% of total GDP growth since mid-2023. Still, skeptics see signs of over-investment eerily reminiscent of 2000’s tech bust, with risk that data center profits won’t keep up with costs. Bubbles aren’t always bad (they leave infrastructure and spark innovation), but the economic landing often stings.
If the AI boom falters, the real economy could be fine—but a stock market rout could ripple through 401(k)s and consumer spending. Is this a smart leap or another bubble ready to burst? The answer shapes everything from job creation to the next political debate.
