The AI ​​data center boom is distorting the US economy

The amount of The capital flowing into AI data center projects is staggering. Last week, Microsoft, Alphabet, Meta and Amazon reported on theirs Investments 2025 The total would be around $370 billion, and they expect that number to continue to rise in 2026. The biggest spender last quarter was Microsoft, which invested nearly $35 billion in data centers and other investments, accounting for 45 percent of its revenue.

Rarely, if ever, has a single technology consumed so much money so quickly. The warnings of an AI bubble are growing louder by the day, but regardless of whether a crash eventually occurs or not, the frenzy is already reshaping the U.S. economy. Harvard economist Jason Furman estimates that investments in data centers and software processing technology were crucial almost all of US GDP growth in the first half of 2025.

Today we examine how data centers impact three critical areas: public markets, jobs and energy.

Payout

The US stock market is booming, largely thanks to AI. AI-related stocks have been in circulation since ChatGPT launched in November 2022 75 percent of the return of the S&P 500 and 80 percent of earnings growth, according to JPMorgan’s Michael Cembalest. The question now is whether this growth will be sustainable as tech companies continue to invest heavily in AI infrastructure.

Earlier this year, tech giants funded their AI projects primarily with whatever cash they had on hand. As financial journalist Derek Thompson pointed outThe ten largest publicly traded US companies entered 2025 with historically high free cash flow margins. In other words, their businesses were so profitable that they had billions of dollars to invest in Nvidia GPUs and data center expansion.

This trend has largely continued until 2025. Alphabet, for example, told investors last week that its capital spending would be up to $93 billion this year, up from the previous estimate of $75 billion. However, it was also reported that sales were up 33 percent year-on-year. In other words, Silicon Valley both spends more and earns more. That means everything is fine, right?

Not quite. For one thing, tech giants seem to be taking advantage of this Accounting tricks to make their finances look rosier than they really are. A significant portion of the AI ​​investment goes to Nvidia, which publishes new versions of its GPUs approximately every two years. But companies like Microsoft and Alphabet currently expect their chips to last six years. If they have to upgrade sooner to remain competitive – a likely possibility – that could reduce their profits and weaken their overall performance.