The A.I. Boom Is Driving the Economy. What Happens if It Falters?
For the first half of 2025, the U.S. economy posted modest GDP growth, but a closer look reveals a striking trend: nearly all of that expansion was fueled by investment in data centers and information technology. According to Harvard economist Jason Furman, if these high-tech investments were excluded, GDP growth would have been just 0.1%—a near standstill that underscores how pivotal artificial intelligence infrastructure has become to macroeconomic performance.
Investment in information-processing equipment and software accounted for only 4% of U.S. GDP in the first half of 2025, yet it contributed 92% of overall growth. This surge is largely driven by tech giants like Microsoft, Google, Amazon, Meta, and Nvidia, who have poured tens of billions of dollars into building and upgrading data centers to meet the explosive demand for AI and large language models.
The scale of this investment is unprecedented. In August, Renaissance Macro Research estimated that the dollar value contributed to GDP growth by AI data-center buildout had surpassed U.S. consumer spending for the first time ever. Consumer spending, which typically makes up two-thirds of GDP, was outpaced by the AI-driven tech sector.
Despite the impressive growth, economists and analysts are raising concerns about the sustainability of the AI boom. The narrative of an AI bubble is gaining traction, with some warning that trillions of dollars are being committed to AI investment, but little is yet showing up in revenues or productivity gains. According to the Financial Times, next year’s projected AI investment could reach close to $400 billion, while revenues from actual AI products and services are estimated at just $20 billion—a significant mismatch.
Stock price valuations in the technology sector are at levels not seen since the dot-com bubble, and uncertainty about the future business models for AI remains high. As economist Avi Goldfarb notes, “Usually by now, a few years into tech innovation, you have some idea what it’s going to be useful for in terms of generating revenues and business models, and right now, it’s still relatively unclear.”
While some companies are reporting cost savings and modest revenue gains from AI adoption, most benefits remain at low levels. For example, 49% of organizations using AI in service operations report cost savings, but most of these are less than 10%. In marketing and sales, 71% report revenue gains, but the most common increase is less than 5%.
On the productivity front, recent studies suggest generative AI may have increased labor productivity by up to 1.3% since the introduction of ChatGPT. Industries with higher reported time savings from AI tools have also seen faster measured productivity growth. However, experts caution that this relationship could be influenced by other factors, and the long-term impact remains uncertain.
The workforce is also undergoing a transformation. BCG research estimates that 40% of all work hours could be impacted by generative AI, with repetitive, digital tasks likely to be phased out. Remaining roles will be transformed into AI-enabled positions, and up to 60% of talent may need upskilling over the next two to five years. Jobs dependent on AI skills are already paying up to 28% more, signaling a shift in the labor market.
As the AI boom continues, policymakers and business leaders are grappling with the question of what happens if the bubble bursts. The head of Google’s parent company, Alphabet, has warned that every company would be affected if the AI bubble were to burst. The potential for widespread economic disruption is real, especially given the heavy reliance on AI-driven growth.
For now, the AI boom is driving the economy, but the risks of a bust are growing. As investment continues to pour into AI, the challenge will be to ensure that the technology delivers real, sustainable value—not just for tech giants, but for the broader economy.