Bank of America compares this round of AI investment to the oil cycle of the 1970s and the technology and shale oil cycles of the 1990s. The chart shows that, based on current capital expenditure plans, the increase in AI investment as a percentage of GDP will continue to rise, and has not yet entered a cyclical decline.
Bank of America believes that the massive investment boom will inevitably face adjustments eventually, but the short-term impact will still lean towards growth:
Data center construction is expanding capacity, supporting economic activity and employment, and partially offsetting the dampening effect of high interest rates on the US economy. The next step is to observe whether AI revenue and productivity gains can catch up with capital expenditure, and whether data center utilization rates remain high.
