A modern-day gold rush is giving a big boost to U.S. GDP
A large data center under construction in California. A surge in demand for artificial-intelligence infrastructure is fueling a boom in data centers across the country and around the globe.
Americans have grown distrustful of artificial intelligence and worry it will eventually take their jobs. But for now, a huge boom in AI spending is powering the U.S. economy.
The AI boom - or bubble, as skeptics call it - has reached new heights, and could go higher still.
By some estimates, the biggest developers are on track to invest $1 trillion or more in 2026 on computer chips, memory storage and other assets used to improve AI models and build data centers.
All of this spending has shown up in a big way, mostly notably in gross domestic product and stock indexes such as the S&P 500 SPX and Dow Jones Industrial Average DJIA.
Start with gross domestic product, the official scorecard of the U.S. economy: Surging investment in "information-processing equipment" - the stuff used to build out AI - added 0.8 percentage point to GDP in the first quarter of 2026, and 0.7 percentage point in the fourth quarter of 2025.
How big is that? The only other time businesses invested so much in high-tech equipment was at the height of the dot-com boom in 2000, when broadband was introduced and Americans discovered the joy of high-speed internet access.
The combined spending in the past two quarters on AI-related equipment even padded GDP more than consumer spending, typically the main conduit by which the economy grows. Consumer spending normally accounts for 70% of all U.S. economic activity.
AI-related spending isn't go to slow much anytime soon, either.
One example: Nvidia (NVDA), the leading chipmaker, just announced it will raise $25 billion through bond sales, in a sign of industry bullishness.
"We think we're in the early stages of scaling up, and we're seeing tech businesses raise a lot of money to fund that process," said Richard Flax, chief investment officer at wealth manager Moneyfarm.
The evidence is piling up. Investment in business equipment, for example, could rise at a frothy 14% annual pace in the second quarter of this year, Oxford Economics estimates. Equipment spending had climbed at a 16% clip in the first quarter.
"We continue to expect business equipment investment to be one of the fastest-growing components of GDP this year," said Matthew Martin, senior U.S. economist at Oxford Economics.
The appetite for AI appears so great that the Trump tariffs, the war with Iran and the recent surge in oil prices (CL00) (BRN00) have done nothing to divert money away from this modern-day gold rush, noted Stephen Stanley, chief U.S. economist at Santander Capital Markets.
"Silly me - I had originally assumed that we might see a temporary pause in investment by some firms ... given the surge in energy prices and uncertainty associated with the conflict in the Middle East," Stanley said.
The AI boom is having an even bigger effect on the stock market. Shares of big AI players such as Nvidia have soared, carrying the rest of the market higher with them.
Take the S&P 500: It's skyrocketed 65% in the past three years and has turned tens of thousands of people into 401(k) millionaires. Over that span, Nvidia's stock soared 362%.
The ascendancy of AI, however, is not having the same effect on broader public opinion.
Americans are increasingly worried AI will take their jobs, for one thing, and they suspect data centers will raise their electricity bills. But so far, there's little evidence to support either of these worries.
What is undeniably true, however, is that all the demand for AI is adding to already high U.S. inflation. Prices for information-processing equipment have soared.
Consumers will soon feel the impact. Apple $(AAPL)$ just announced big price increases on iPhones, iPads and Macbooks.
"The AI investment boom is contributing to price pressures across semiconductors, electronics, computing equipment, electricity and other technology-related inputs," noted Gregory Daco, chief economist at EY Parthenon.
-Jeffry Bartash
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(END) Dow Jones Newswires
June 27, 2026 09:00 ET (13:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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