Artificial intelligence spending has taken center stage in the US economy, surpassing consumer spending as the primary driver of growth. The stock market’s record highs are largely attributed to technology companies’ investments in AI. A recent study showed that if AI investment wasn’t included, the economy would have grown at a third of its current rate.
Despite accounting for only 6% of economic spending, AI investments make up around 70% of consumer spending. Tech giants like Google, Meta, and Amazon are expected to spend nearly $400 billion on data centers this year, sparking concerns about potential economic damage if their bets don’t pay off.
Some experts warn that a bubble in AI investment is forming, with many new initiatives struggling to turn profits. Even prominent tech figures acknowledge the risks, citing past examples of infrastructure build-outs leading to bubbles and eventual collapse.
The Federal Reserve’s beige book reported growth driven by surging AI investments, but also noted modest wage growth and employment slight declines. Tech stocks dominate public markets, making their fortunes a significant influence on stock indexes and consumer confidence.
As investors become more cautious, venture capitalists are competing to invest in hot AI start-ups, driving up valuations. However, many entrepreneurs remain undaunted by warnings that AI excitement has become overheated. They believe there’s still potential for growth in the rapidly evolving AI market.
Source: https://www.washingtonpost.com/technology/2025/09/30/ai-economy-investment-bubble