TMC cries foul over ‘selective FIR’ against Abhishek BanerjeeThe FIR was registered at the Bidhannagar North Cyber Crime Police Station for allegedly making inflammatory statements ahead of the elections. Updated on: May 17, 2026 2:31 PM IST ANI Share via Copy link TMC leader Tanmoy Ghosh on
Targeting commercial shipping, endangering civilian crew and impeding freedom of navigation in the Strait of Hormuz is "unacceptable", India’s Permanent Representative to the UN Parvathaneni Harish has said, stressing that international law governing safe passage must be "fully respected"
Editorial independence is core to our work. Some links may earn us a commission, without influencing our opinions.Tried and Tested: I used this hair dryer for 30 days, and it has changed the way I dry my frizzy hairI have used Croma hair dryer for over three weeks
The story so far: Russia-based hackers targeted high-profile users in Germany, according to reports from the German media over the past few weeks. Der Spiegel reported that 300 Signal accounts belonging to politically connected individuals were attacked. On May 7
Fitness coach shares realistic rules he would follow to lose 30 lbs of stubborn belly fat without extreme dietingFrom protein intake to walking daily, here’s a breakdown of realistic rules that you can follow to lose 30 lbs of stubborn belly fat. Published on: May 17
Ankur Warikoo shares update on shutting down ₹100 crore courses business: ‘The problem is the system'Ankur Warikoo has now clarified that the courses business has not ended entirely but has instead been converted into a subscription-based model under WebVeda. Updated on: May 17
Liquor prices revised in Karnataka after new alcohol tax system implementedThe excise department said the new tax structure aims to rationalise liquor prices, make alcohol cheaper and align rates with neighbouring states. Updated on: May 17, 2026 2:31 PM IST PTI Share via Copy link The Karnataka
An Ebola outbreak in the Democratic Republic of Congo has killed more than 80 as authorities warned there was no vaccine for the strain in a crisis that the World Health Organization declared an international health emergency on Sunday (May 17, 2026)
The AI Spending Boom Is Massive But Not Unprecedented
The AI Spending Boom Is Massive But Not Unprecedented
(Bloomberg Opinion) -- The boom in capital expenditures related to generative artificial intelligence is generating lots of questions about whether it is sustainable. Coming up with definitive answers to them is something of a fool's errand. Quantifying the size of the capex surge seems like a more productive endeavor — and one that may offer some hints as to its sustainability.
Even that is easier said than done. After spending the better part of three days making chart after chart after chart (a small sample of which I share here), I now know that there are many different ways to quantify the AI capex boom that lend themselves to many different narratives. My general sense after this exercise is that although AI spending has reached the point of major economic significance it has yet to become quite the force that tech and telecom were in the late 1990s. Yes it is driving a large share of current US economic growth, and if it were to end suddenly there would be unpleasant consequences, but at this point there's nothing especially alarming. At a few big tech companies, though, the spending is like nothing they've ever attempted. Either it pays off, or there will be some very challenging years ahead.
Here's a top-down view from the most recent gross domestic product data released late last month by the US Bureau of Economic Analysis. Private domestic investment in information processing equipment (split here between computers and peripheral equipment and the rest) and software was 4.4% of GDP in the second quarter, just below its 4.6% peak in the final quarter of 2000. If the pace of increase over the past two quarters were to continue, it would leap past that by the end of this year — but wouldn't be out of line with the long-run trend of increasing tech spending.
This includes a lot of spending on things not directly related to AI, while excluding some AI-related spending on research and development, which I chose to leave off because it includes R&D in pharma and other industries and its share of GDP has been flat for the past five years. In July, Jens Nordvig of Exante Data Inc. offered a bottom-up estimate, extrapolated from chipmaker Nvidia Corp's revenue, of $387 billion in capital spending just on AI data centers in 2025. That would be about 1.3% of GDP, up from 0.8% in 2024 and 0.3% in 2023. (Nordvig's estimates of AI's impact on GDP growth are larger than that because of estimated multiplier effects, and current consensus forecasts of Nvidia's revenue for the rest of the year would put the AI-data-center GDP share closer to 1.5%, but I'll stick with the original numbers for simplicity's sake.)
That 1%-of-GDP increase since 2023 is much bigger than the 0.4%-of-GDP increase in information technology investment shown in the above chart. It could be that AI spending is cannibalizing some other tech expenditures, but the main explanation for the disparity seems to be that the BEA's domestic investment numbers exclude spending on imported technology — and net imports of information-technology products are almost half a percent of GDP higher than they were two years ago. In national income and product accounting, net imports are subtracted from GDP, so I can't just combine the two charts, but the import numbers do bring the spending increase close to Nordvig's estimates.
So is 1.3% of GDP going to AI investment a lot? In a post based partly on Nordvig's work, veteran tech analyst Paul Kedrosky compared his own 1.2%-of-GDP estimate of current AI capex with 1% of GDP for telecom investment at the peak of that boom in 2020, and 6% of GDP for railroads in the late 1800s. “It's not clear whether we're at peak yet or not,” he wrote, “but ... we're up there.”
Up there, perhaps, but not breaking any records yet. As is apparent from the first chart above, there was more to the 1990s tech-investment boom than just telecom (which falls mostly under “other information processing equipment” in the chart). Non-telcos were loading up on computers and software, and the increase in overall tech-related capital spending was much bigger than what we've experienced with AI — which could of course change if AI spending keeps growing.
As for the late-19th-century railroad investment boom, AI investment still has a long way to go to match the economic impact of that episode in American history. I assembled this chart from economist Melville J. Ulmer's 1960 book Capital in Transportation, Communications, and Public Utilities: Its Formation and Financing and the GDP estimates maintained by MeasuringWorth.
Railroad capex averaged 2.4% of GDP in the 1870s and 1880s but fluctuated wildly, approaching 6% near the beginning of the period and collapsing to 0.3% during the long depression that followed the financial crisis of 1893 — before beginning a long era of steadier but lower investment relative to GDP.
Overshooting and correction is in the nature of investment booms, which in the past tended to benefit society even if not always those who did the investing. We're still using fiber-optic cable laid in the late 1990s and early 2000s, and relying on some railroad infrastructure from 1873. While one can see lots of potential economic benefits from investment in AI, it's hard to imagine that vintage-2025 Nvidia AI chipsets will be of much use a century or even a decade from now.
Companies plowing money into AI data centers are funneling it into rapidly depreciating assets, and given that it's a handful of companies doing most of the plowing, one can't help but wonder what they're getting themselves into. Tech companies making huge investments in AI occupy the top five spots in US capital expenditure rankings. None of the five was in the top 10 a decade ago (Google parent Alphabet Inc. was No. 12).
As of the second quarter, capital expenditures at these five companies were running at an annual pace of $313 billion, which is about 1% of US GDP, although not all the spending is in the US. That's more than double their spending in 2023.
Another way of measuring this spending is as a percentage of revenue. For Google parent Alphabet and Facebook parent Meta Platforms Inc., current ratios are high but not out of line with their spending the past couple of decades. For Microsoft Corp., Oracle Corp. and Amazon.com Inc., where one can track spending back to the 1990s, the current investment boom really is something new. Amazon's ratio of capital spending to revenue has yet to equal the peak of 17.5% near the end of the dot-com bubble in the fourth quarter of 1999, but it was a small, money-losing company then and is on track to to surpass that record soon anyway. Microsoft and Oracle, already big, profitable companies in the 1990s, were not spending at anywhere near current rates then.
In the 1990s Oracle and Microsoft sold software and Amazon sold books. Now they offer software as a service and hosting for other SaaS providers. That means they have big infrastructure commitments that they didn't before, so it's not crazy that their capital spending has risen. But Oracle's 46.5% of revenue going to capital spending over the past four quarters is a higher share than even infamous telecom high-flyer (and subsequent steep faller) WorldCom Inc. ever hit in the 1990s.
It's a huge bet — and huge bets don't always pay off. The wild recent gyrations in Oracle's stock price, which rose almost 50% in early September and has fallen 15% since, are an indication of the stakes.
More From Bloomberg Opinion:
This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”
More stories like this are available on bloomberg.com/opinion
©2025 Bloomberg L.P.
Source: LiveMint
Related Posts: Starc lacks the PR push but he's not far behind Bumrah as the generation's best The Science Behind Early-Morning Heart Attacks In The Younger Generation Bloomberg Green’s Guide to Climate Week NYC Himesh Reshammiya becomes the only Indian on Bloomberg’s global pop power list Assam’s capital Guwahati sees nightlife boom with rising clubs Bihar Election Opinion Poll Opinion | Why Disruption Cannot Be The Opposition’s Parliamentary Strategy Opinion | Celebrating Peace And Harmony Opinion | Who Controls Pakistan’s Nuclear Arsenal Opinion | Delhi Instead Of Davos
Indian woman explains why Florida feels impossible to leave after 5 years: ‘Once someone comes here…’An Indian woman in the US said life in Florida made her feel she could not move to any other state. Published on: May 17, 2026 2:28 PM IST By Mahipal Singh Chouhan Share via Copy link An
7 hours ago
Tilak Varma, the young Indian cricketer who plays for Mumbai Indians and the Indian team, is once again at the centre of dating rumours involving Telugu actress Sreeleela after a viral video featuring Suryakumar Yadav sparked fresh speculation online. The clip, now going viral across Reddit
10 hours ago
Indian-origin CEO announces layoffs at $3.4 billion US startup: ‘Difficult day’Healthtech unicorn Innovaccer, led by Abhinav Shashank, has carried out a fresh round of layoffs as it moves towards an AI-native structure. Updated on: May 17, 2026 11:04 AM IST By Sanya Jain Share via Copy link
10 hours ago
On May 10, Prime Minister Narendra Modi’s motorcade drove through Gujarat’s Jamnagar, a town known for housing the world’s largest oil refinery. Videos showed hundreds of Bharatiya Janata Party supporters lining the route, waving party flags and cheering.On May 10
10 hours ago
At least eight people were killed and 25 others injured after a train collision triggered a fire that engulfed a public bus in Bangkok on Saturday (May 16, 2026), rescue officials and police said. Firefighters and rescue crews were dispatched as flames engulfed the bus
10 hours ago
‘This day is my favourite’: Indian man praises UK corporate culture after painting zoo railings with colleaguesAn Indian man shared how UK Volunteer Day culture gave him a chance to try painting and bond with colleagues. Published on: May 17
10 hours ago
Gurugram-based logistics services provider has elevated six senior executives to C-suite roles as the company looks to strengthen its leadership team amid expansion across business verticals. The company said in a stock exchange filing that the appointments are effective immediately
10 hours ago
Former couple Mouni Roy and Suraj Nambiar announced that they were going their separate ways earlier this week. Fans noticed that they are now following each other again on Instagram. Before Mouni Roy and Suraj Nambiar announced their separation
10 hours ago
You know a dish is interesting when it makes you stop and think, “Wait, why have I never eaten this combination before?" That’s exactly what Amritsari Chole Baozi feels like. Imagine soft, fluffy bao buns stuffed with spicy Punjabi chole, topped with pickled onions and mint mayo, comforting
10 hours ago
Manipur deputy chief ministers key negotiators in abduction crisisThe two leaders are engaging with their respective communities to secure the safe return of at least 20 abducted people, officials said. Published on: May 17, 2026 11:07 AM IST By Prawesh Lama
10 hours ago
Foxtail millets idli recipe: Give a delicious and healthy spin to this South Indian staple with Sanjeev Kapoor' recipeFoxtail millet, a nutritious grain from India, is used in various dishes. Chef Sanjeev Kapoor shares a recipe for idlis using foxtail millet and urad dal. Updated on: May 17
10 hours ago
The Israeli military on Saturday (May 16, 2026) confirmed that Ezzedine Al-Haddad, chief of Hamas' armed wing, was killed in an air strike in Gaza the day before. "The IDF and the ISA announce that yesterday, in a precise strike in the area of the City of Gaza
10 hours ago
An Iranian state television presenter fired a shot at the flag of the United Arab Emirates during a live firearms training broadcast, in a dramatic moment amid rising regional tensions and the increasingly militarised messaging on Iranian state media
10 hours ago
Donald Trump’s White House ballroom funding hits US Senate roadblockA Republican plan to earmark federal funding for President Donald Trump’s planned ballroom hit at least a temporary roadblock Saturday in the US Senate. Updated on: May 17, 2026 10:31 AM IST Bloomberg Share via Copy link A
10 hours ago
Virat Kohli, who has retired from Tests and T20Is but remains a cornerstone in the 50-over format, opened up on playing the ODI World Cup 2027, amid the ongoing IPL 2026 season. In a candid and fiercely honest revelation, Indian batting great Virat Kohli has finally broken his silence on the
10 hours ago
Some people wake up early to work out. Others wake up early purely for good breakfast, and honestly, that feels like the better life choice. Because there’s something deeply satisfying about starting the day with great coffee, buttery croissants, perfectly runny eggs
10 hours ago
A Reddit post shared by a CBSE Class 12 student has started a wider conversation online about pressure from parents after board exam results. The student claimed their father reacted harshly after seeing the marks, leading to both emotional and physical punishment at home
10 hours ago
China’s Ministry of Commerce said that Beijing and Washington had reached an agreement covering the purchase of US aircraft as well as the supply of jet engines and aviation components to China, marking a major breakthrough during US President Donald Trump’s state visit
10 hours ago
Weekly Tarot Horoscope for May 17–23, 2026: Karmic awakenings, some momentum, and emotional resets may all be arrivingWeekly Tarot Horoscope: Read your tarot prediction for May 17-23, 2026. Published on: May 17, 2026 10:00 AM IST By Kishori Sud Share via Copy link Aries This week asks you to
10 hours ago
It is just past noon at the crescent-shaped Palolem beach on the southern tip of Goa's long, sandy coastline. The sun is blinding hot, but that has not deterred the tourist hordes from splashing about in the ocean. The beachside shacks and cheap backpacker hotels hugging the bay in the state often
10 hours ago
India’s anti-narcotics agencies have made a landmark breakthrough after seizing the country’s first-ever consignment of Captagon, a highly controversial amphetamine-based drug often referred to as the “Jihadi drug" in an operation that has gone viral online
10 hours ago
Chaturvedi said, "Actually, it's not just one suicide; there are three such suicides that have taken place. And yes, I agree with what Rahul Gandhi is saying, because these are murders committed by the Government of India by totally disregarding the mental stress and mental agony of lakhs of
10 hours ago
IMD to revamp heatwave alerts, introduce percentile-based thresholds for first timeUnder the new framework, a heat alert will be triggered when maximum temperatures exceed the 95th percentile for a given location. Updated on: May 17, 2026 10:56 AM IST By Jayashree Nandi Share via Copy link
10 hours ago
Aditi Rao Hydari serves regal glamour at Cannes in a breathtaking green gown and statement silhouetteAditi Rao Hydari served a high-fashion red carpet look at Cannes 2026 with a green draped couture gown that took the internet by storm. Let’s decode her look. Published on: May 17
10 hours ago
India’s external affairs ministry on Saturday rejected an award reportedly issued by a court of arbitration about maximum pondage at Indian hydroelectric projects on the Indus river system, calling it null and void. Pondage refers to water that accumulates behind the dam of a run-of-the-river
10 hours ago
Bengal: Major anti-encroachment drive conducted to clear out Howrah station areaBengal: Major anti-encroachment drive conducted to clear out Howrah station area Published on: May 17, 2026 11:17 AM IST PTI Share via Copy link Kolkata, A massive anti-encroachment drive was carried out outside Howrah
10 hours ago
Actor Rajinikanth on Sunday broke his silence on actor-turned-politician Vijay becoming the state’s chief minister, saying he was “extremely shocked" by the development. Addressing reporters at his Poes Garden residence in Chennai, Rajinikanth said he felt compelled to clarify his position
10 hours ago
