Headaches Grow as AI-Related Investments to Account for 50% of US GDP Growth in First Half of 2025

• How Is AI Dominating US Economic Growth?
• Why Are Big Tech’s Capital Expenditures Soaring?
• What’s Driving the AI Wealth Effect?
• Is the AI Job Market a Bright Spot?
• What Are the Hidden Risks of the AI Boom?
• Could AI Productivity Gains Fall Short?
• FAQs: AI’s Make-or-Break Role in the US Economy

The US economy is increasingly reliant on AI-driven investments, which are projected to make up half of the country's GDP growth in the first half of 2025. While this boom has fueled stock market gains and consumer spending, experts warn of vulnerabilities—rising debt, supply chain bottlenecks, and the risk of an AI bubble. This article dives into the data, the risks, and what it means for the broader economy.

How Is AI Dominating US Economic Growth?

The turbulence in AI-linked stocks last week highlighted just how vulnerable the economy has become. With growth heavily dependent on machine learning investments and related wealth effects, a sudden collapse could send shockwaves through the system. Corporate AI investments are estimated to account for half of the US’s inflation-adjusted GDP growth in the first six months of 2025. Rising AI stock prices have also boosted household wealth, funneling additional spending into the economy. "Without the AI boom, we might already be in a recession," says Peter Berezin, global chief strategist at BCA Research.

Why Are Big Tech’s Capital Expenditures Soaring?

While other sectors stagnate, tech giants are pouring money into physical assets. Microsoft, Amazon, Alphabet, and Meta are projected to spend $344 billion on capital expenditures this year—1.1% of GDP, up from $228 billion in 2024. Barclays estimates that software, data centers, and computer hardware added roughly one percentage point to GDP growth in early 2025, with AI driving most of that expansion. Adjusting for imports, AI-related spending still contributed 0.8 percentage points to growth—half of the total 1.6% GDP expansion.

What’s Driving the AI Wealth Effect?

Rising AI stock prices have supercharged consumer spending. JPMorgan Chase estimates that last year’s AI stock surge added 0.9% ($180 billion) to consumer expenditures. Adjusted for inflation, spending grew 5.6% year-over-year through August. Nvidia’s blowout Q4 revenue forecast ($65 billion) further fueled optimism. However, this wealth effect is fragile—a 20-30% market correction could slash GDP growth by 1-1.5 percentage points within a year, warns Barclays’ senior US economist Jonathan Millar.

Is the AI Job Market a Bright Spot?

AI’s labor impact is uneven. While tech sector employment has declined since 2022, data center construction is booming. Turner Construction CEO Ben Kaplan notes that each project now requires 100-5,000 workers, with data centers making up 35% of their US backlog—up from 13% five years ago. But supply chain delays for generators, switchgear, and other equipment now stretch for months. "Every LINK in the chain is under strain," Kaplan says.

What Are the Hidden Risks of the AI Boom?

Debt is piling up. Oracle’s liabilities surpassed $100 billion after an $18 billion bond offering, partly to fund AI infrastructure. GPU rental firms like CoreWeave are also borrowing heavily. While Berezin doubts AI-linked debt alone could trigger a crisis, he warns that financial markets are interconnected—problems in one area could spread rapidly. Meanwhile, S&P 500 volatility last week reflected growing fears of an AI bubble.

Could AI Productivity Gains Fall Short?

Long-term hopes that AI will boost productivity remain unproven. For now, the economy is leaning on speculative growth. If AI investment slows, GDP growth could drop another 0.5 percentage points; a full stall WOULD mean a 1-point decline. Outside data centers, commercial construction—malls, offices—remains sluggish. As Bank of America economist Stephen Juneau puts it: "Right now, AI is the only game in town."

FAQs: AI’s Make-or-Break Role in the US Economy

How much will AI contribute to US GDP growth in 2025?

AI-related investments are projected to account for 50% of US GDP growth in the first half of 2025.

Which companies are leading AI infrastructure spending?

Microsoft, Amazon, Alphabet, and Meta will invest $344 billion in 2025—up from $228 billion in 2024.

What happens if AI stock prices decline sharply?

A 20-30% drop could reduce GDP growth by 1-1.5 percentage points within a year.

Are data centers creating jobs despite tech sector layoffs?

Yes—data center construction now employs 100-5,000 workers per project, making up 35% of Turner Construction’s US backlog.

What’s the biggest risk to the AI-driven economy?

Debt (e.g., Oracle’s $100B+ liabilities) and supply chain bottlenecks could amplify any downturn.