The quantity of capital pouring into AI knowledge middle tasks is staggering. Final week, Microsoft, Alphabet, Meta, and Amazon reported their 2025 capital expenditures would complete 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 knowledge facilities and different investments, equal to 45 p.c 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 day-after-day, however whether or not or not a crash finally occurs, the frenzy is already reshaping the US financial system. Harvard economist Jason Furman estimates that funding in knowledge facilities and software program processing know-how accounted for almost all of US GDP progress within the first half of 2025.
In the present day, we’re how knowledge facilities are impacting three essential areas: public markets, jobs, and vitality.
Cashing Out
The US inventory market is booming, principally due to AI. Since ChatGPT launched in November 2022, AI-related shares have accounted for 75 p.c of S&P 500 returns and 80 p.c of earnings progress, in accordance with JPMorgan’s Michael Cembalest. The query now could be whether or not that progress shall be sustainable as tech companies proceed spending closely on AI infrastructure.
Initially of this yr, tech giants have been financing their AI tasks principally 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 stream margins. In different phrases, their companies have been so worthwhile that that they had billions of {dollars} sitting round to place in the direction of Nvidia GPUs and knowledge middle buildouts.
That development has largely continued by means of 2025. Alphabet, for instance, instructed traders final week that its capital expenditures this yr could 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 p.c yr over yr. Put one other means, Silicon Valley is each spending extra and incomes extra. Meaning all the things is okay, proper?
Not precisely. For one factor, tech giants look 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 the moment estimating that their chips will final six years. If they should improve sooner to remain aggressive—a possible risk—that might wind up consuming into their earnings and weaken their total efficiency.
