AI Infrastructure Investment Drives Real Economy Growth
Optimism around AI's potential is not only boosting stock markets but also driving significant real economy growth through massive investments in data centers, semiconductors, and power supply.
Ai InfrastructureReal EconomyTech InvestmentsData CentersEconomic GrowthReal Estate NewsAug 27, 2025
It’s not because of how companies are using the technology, at least not yet. Rather, the sheer amount of investment — in data centers, semiconductor factories, and power supply — needed to build the computing power that AI demands is creating enough business activity to brighten readings on the entire domestic economy.
Companies will spend $375 billion globally in 2025 on AI infrastructure, the investment bank UBS estimates. That is projected to rise to $500 billion next year. Investment in software and computer equipment, not counting the data center buildings, accounted for a quarter of all economic growth this past year, data from the Commerce Department shows.
Even that probably doesn’t reflect the whole picture. Government data collectors have long had trouble capturing the economic value of semiconductors and computer equipment that large tech companies like Meta and Alphabet install for their own use, rather than farming out to contractors, so the total impact is likely to be higher.
The big tech companies are the largest financiers of the frenzy, but private equity firms have been pouring in capital, too. Brookfield Asset Management, which manages a vast real estate portfolio, estimates that AI infrastructure will sop up $7 trillion over the next 10 years.
The torrent of cash comes as the effects from Biden-era infrastructure subsidies fade, erratic tariffs freeze corporate decision making, and high borrowing costs deter less lucrative real estate projects such as housing and warehouses. In 2025, spending on data center construction — not including the cost of all the technology they house — will exceed investment in traditional office buildings, according to the Dodge Construction Network.
“The expectations of very high returns in this industry are trumping the high interest rates that we are facing today,” said Eugenio Alemán, chief economist with the financial services company Raymond James. Companies are promising even more spending, but their ability to deliver, he noted, depends on whether their expectations are fulfilled. Most AI tools are not profitable currently, and they will have to generate huge cash flows over time for the tech companies to recoup their investments.
“There is always a risk that very little of what they say is going to pan out,” Dr. Alemán said. “So whenever they figure out that it is not what they thought, there is going to be a large correction.”
Frequently Asked Questions
What is driving the growth in the real economy?
The growth in the real economy is being driven by massive investments in AI infrastructure, including data centers, semiconductor factories, and power supply.
How much is expected to be spent globally on AI infrastructure by 2025?
Globally, companies are expected to spend $375 billion on AI infrastructure by 2025, with projections rising to $500 billion the following year.
What is the impact of AI infrastructure investment on economic growth?
Investment in AI infrastructure, particularly in software and computer equipment, has accounted for a quarter of all economic growth in the past year, according to the Commerce Department.
Who are the major investors in AI infrastructure?
The major investors in AI infrastructure include big tech companies like Meta and Alphabet, as well as private equity firms such as Brookfield Asset Management.
What are the risks associated with these high AI investments?
The risks include the possibility that the high expectations for returns may not materialize, leading to a large correction if the investments do not generate the anticipated cash flows.
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