The quantity of capital pouring into AI information middle initiatives is staggering. Final week, Microsoft, Alphabet, Meta, and Amazon reported their 2025 capital expenditures would whole roughly $370 billion, and so they count on 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.
Not often, if ever, has a single expertise 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 ultimately occurs, the frenzy is already reshaping the US economic system. Harvard economist Jason Furman estimates that funding in information facilities and software program processing expertise accounted for almost all of US GDP progress within the first half of 2025.
As we speak, we’re taking a look at how information facilities are impacting three essential areas: public markets, jobs, and power.
Cashing Out
The US inventory market is booming, principally because of AI. Since ChatGPT launched in November 2022, AI-related shares have accounted for 75 % of S&P 500 returns and 80 % of earnings progress, in keeping with JPMorgan’s Michael Cembalest. The query now could be whether or not that progress will likely be sustainable as tech companies proceed spending closely on AI infrastructure.
Firstly of this yr, tech giants have been financing their AI initiatives principally with money that they had readily available. As monetary journalist Derek Thompson identified, the ten largest US public corporations kicked off 2025 with traditionally excessive free money move margins. In different phrases, their companies have been so worthwhile that that they had billions of {dollars} sitting round to place in direction of Nvidia GPUs and information middle buildouts.
That pattern has largely continued via 2025. Alphabet, for instance, informed 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. But it surely additionally reported that income was up 33 % yr over yr. Put one other means, Silicon Valley is each spending extra and incomes extra. Meaning every little thing is ok, proper?
Not precisely. For one factor, tech giants seem like utilizing accounting methods 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 corporations like Microsoft and Alphabet are presently estimating that their chips will final six years. If they should improve sooner to remain aggressive—a possible chance—that would wind up consuming into their earnings and weaken their total efficiency.