The quantity of capital pouring into AI information heart tasks is staggering. Final week, Microsoft, Alphabet, Meta, and Amazon reported their 2025 capital expenditures would whole roughly $370 billion, and so they anticipate that quantity to maintain rising in 2026. The most important spender final quarter was Microsoft, which put almost $35 billion into information facilities and different investments, equal to 45 % of its income.
Hardly ever, if ever, has a single know-how absorbed this a lot cash this shortly. Warnings of an AI bubble are getting louder every single day, however whether or not or not a crash finally occurs, the frenzy is already reshaping the US economic system. Harvard economist Jason Furman estimates that funding in information facilities and software program processing know-how accounted for almost all of US GDP development within the first half of 2025.
At this time, we’re how information facilities are impacting three essential areas: public markets, jobs, and power.
Cashing Out
The US inventory market is booming, largely due to AI. Since ChatGPT launched in November 2022, AI-related shares have accounted for 75 % of S&P 500 returns and 80 % of earnings development, based on JPMorgan’s Michael Cembalest. The query now’s whether or not that development will likely be sustainable as tech companies proceed spending closely on AI infrastructure.
At first of this yr, tech giants had been financing their AI tasks largely with money that they had available. As monetary journalist Derek Thompson identified, the ten largest US public firms kicked off 2025 with traditionally excessive free money circulation margins. In different phrases, their companies had been so worthwhile that that they had billions of {dollars} sitting round to place in the direction of Nvidia GPUs and information heart buildouts.
That pattern has largely continued via 2025. Alphabet, for instance, instructed traders final week that its capital expenditures this yr can be as a lot as $93 billion, a rise from its earlier estimate of $75 billion. However it additionally reported that income was up 33 % yr over yr. Put one other means, Silicon Valley is each spending extra and incomes extra. Which means the whole lot is okay, proper?
Not precisely. For one factor, tech giants seem like utilizing accounting tips to make their financials look rosier than they could actually be in actuality. A good portion of AI funding flows to Nvidia, which releases new variations of its GPUs roughly each two years. However firms like Microsoft and Alphabet are at present estimating that their chips will final six years. If they should improve sooner to remain aggressive—a probable risk—that might wind up consuming into their earnings and weaken their total efficiency.