Artificial intelligence (AI) capital spending is rising so rapidly that it now has an observable effect on the $30 trillion U.S. economy. In the second quarter of 2025, investment in data centers, computers, and communications equipment boosted the Gross Domestic Product (GDP) by about 0.2% to 0.3% compared to prior spending fluctuations. This increase has mostly been driven by five of the largest players, Amazon, Google, Meta, Microsoft, and Oracle, in the S&P 500 with the largest capital budgets. The impact on GDP from their investments may be approximately 0.4%. However, these high levels of investment growth could also be a problem if these companies lose money and begin cutting capital substantially, as occurred in the early 2000s tech bust.
Measuring AI Capital Investment in the U.S. Economy
In summary, the U.S. Bureau of Economic Analysis (BEA) classifies business investment into 3 major asset categories: structures, equipment, and intellectual property—that is, assets utilized in production over 12 months. Most AI-related investments are either structures (i.e., data center construction) or equipment (i.e., computer and peripheral equipment, communications equipment). Since 2014, spending on data center construction has increased tremendously, offsetting the decreases in warehouse building that normalized following the pandemic-related e-commerce boom.
While physical construction spending is meaningful, the major share of capital expenditure goes towards servers and other equipment located within the data centers, so both types of construction are good to know about. AI-related investments are costly investments in physical space that expand the nation’s infrastructure but are complex to fully encapsulate within the confines of official statistics. The associated investments in chipmaking equipment and power plants add additional layers of economic footprint that expand the definition of AI-related spending and illustrate the role of AI in shaping the long-term direction of the U.S. economy.
The Economic Impact and Risks of AI Capital Spending
Capital expenditures from Amazon, Google, Meta, Microsoft, and Oracle have been key drivers of recent U.S. GDP growth. If we fully account for their related investments in AI, this may increase GDP by 0.4%, which is approximately 10% of the GDP increase in the past two years. In addition to data centers, the growing computer need for AI will lead to investment in other infrastructure, specifically, power plants and electricity generation, as AI increases its demand on infrastructure, which extends the economic impact of AI.
For these companies, growing their investments quickly presents risk. Suppose these companies pursue investments that are not profitable. In that case, they may cut back on spending, which could lead to another downturn similar to the late 1990s and early 2000s tech bust, while this would likely cause a significant slowdown in investment and employment and hurt the economy. While the economic impact of AI depends on these companies being able to return profitable investment levels in both the short-term and long-term commitment to AI infrastructure for sustained economic growth due to AI technologies.
AI Capital Spending’s Growing Economic Role with Caution
AI capital spending is increasingly changing the U.S. economy through GDP growth and technology investment. The vast scale and concentration factor of the leading tech firms suggest that AI is fundamentally important to economic growth and economic infrastructure development. However, as seen in previous cycles, firms could cut spending if returns on investments diminish, resulting in declines in business investment and possibly job losses. Analysts will need to scrutinize investment returns and economic ramifications to ensure that the associated economic value with AI is sustained and distinguished from boom-bust cycles that other technology advancements have experienced. The future trajectory of AI is promising, but investors must monitor investments and proceed with caution.
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