Story thread · 2 reports / 2 sources

Quantifying the AI boom crowding-out effect

axios.com · 1d · first reportShare

When investment on the scale of the current AI boom occurs, it inevitably has to come at the expense of something. All the resources devoted to building data centers and developing AI models would otherwise go to something else. The big picture: This crowding out is smaller than you might expect, Goldman Sachs economists find in a new note. But it does exist, they say, and takes the form of displacing other tech investment and construction , as well as raising corporate borrowing costs. By the numbers: AI investment will be about $600 billion this year, some 2% of GDP, accounting for 10% of business fixed investment and 15% of equipment investment, economists Jessica Rindels and David Mericle wrote. State of play: The first crowding-out channel they identify is the displacement of other tech spending at the hyperscalers themselves and at the companies that spend cold, hard cash on AI services. Corporate IT budgets, for example, that face new, big costs for AI tokens may seek to cut bac