The AI Data Center Boom Is Warping the US Economy

"The amount of capital pouring into AI data center projects is staggering. Last week, Microsoft, Alphabet, Meta, and Amazon reported their 2025 capital expenditures would total roughly $370 billion, and they expect that number to keep rising in 2026. The biggest spender last quarter was Microsoft, which put nearly $35 billion into data centers and other investments, equivalent to 45 percent of its revenue."

"Rarely, if ever, has a single technology absorbed this much money this quickly. Warnings of an AI bubble are getting louder every day, but whether or not a crash eventually happens, the frenzy is already reshaping the US economy. Harvard economist Jason Furman estimates that investment in data centers and software processing technology accounted for nearly all of US GDP growth in the first half of 2025."

Microsoft, Alphabet, Meta, and Amazon reported combined 2025 capital expenditures of roughly $370 billion and expect further increases in 2026. Microsoft invested nearly $35 billion last quarter in data centers and other projects, about 45 percent of its revenue. Investment in data centers and software processing technology accounted for nearly all US GDP growth in the first half of 2025. Since November 2022, AI-related stocks produced 75 percent of S&P 500 returns and 80 percent of earnings growth. Tech firms have financed AI expansion largely from historically high free cash flows while increasing capital guidance, exemplified by Alphabet's up-to-$93 billion estimate.

Read at WIRED