The United States economy has developed a significant dependence on artificial intelligence, where a potential slowdown in this sector could trigger a widespread recession. Recent turbulence in AI-related stocks underscores a critical vulnerability for economic stability.
The AI Investment Boom
Business investment in artificial intelligence has become a primary engine for US economic expansion. According to analysis, AI-related investment might have contributed to nearly half of the inflation-adjusted GDP growth during the first six months of 2025. Economist Peter Berezin from BCA Research stated that without this AI boom, the economy could already be in a recession.
This reliance is starkly evident when examining other sectors. Private business investment, excluding AI categories, has remained mostly flat since 2019. Commercial construction for shopping centers and office buildings has declined, making AI spending the dominant investment source. Stephen Juneau from Bank of America emphasized that AI is currently the only major source of investment driving economic activity.
Tech Giants Driving Capital Expenditure
The scale of investment from major technology companies is unprecedented. Bank of America estimates that just four corporations—Microsoft, Amazon, Alphabet (Google's parent), and Meta Platforms—will make $344 billion in capital expenditures this year. This substantial amount represents approximately 1.1% of the entire US GDP, showing a significant increase from $228 billion spent last year.
Barclays analysis indicates that investment in software, computer equipment, and data centers boosted GDP growth by around 1 percentage point annualized in the first half of 2025. Even after accounting for imported components like Nvidia chips that must be subtracted from domestic production calculations, AI spending still increased economic output by an annualized 0.8%. Since GDP grew by 1.6% during this period, without AI contribution, growth would have been a sluggish 0.8%.
Wealth Effect and Employment Impact
Beyond direct investment, rising AI stock values are creating a wealth effect that stimulates consumer spending. JPMorgan Chase calculations show that increasing prices of AI stocks alone boosted consumer spending by 0.9%, equivalent to $180 billion over the past year. This additional spending, though representing a small portion of overall consumption growth, remains crucial since consumer spending accounts for about two-thirds of annual economic output.
The employment picture presents a mixed scenario. Completed data centers employ relatively few people, and overall tech employment has declined since 2022. However, the construction sector benefits significantly from data center projects. Ben Kaplan from Turner Construction noted that data centers now represent around 35% of their US project backlog, up from just 13% five years ago. Each data center construction requires between 100 to 5,000 workers, providing crucial employment in a construction sector challenged by high interest rates and real estate weakness.
Risks and Vulnerabilities
The economy's deep dependence on AI creates substantial risks. Stock price-to-earnings ratios are near record highs, and if profit predictions prove overly optimistic, share prices could collapse. The S&P 500 recently fell about 2% amid bubble concerns, despite a partial recovery. Federal Reserve officials have expressed concerns about potential stock price declines, particularly if markets reassess AI technology possibilities.
Barclays senior economist Jonathan Millar estimates that a 20% to 30% stock market decline could reduce GDP growth by 1 to 1.5 percentage points over approximately one year. If AI investment growth stops completely, that could remove a full percentage point from economic growth. The situation becomes particularly dangerous because, as BCA's Berezin warned, combining a fragile labor market with a capital expenditure bust significantly increases recession probability.
Additional risks emerge from growing AI-related corporate borrowing. Oracle's debt recently exceeded $100 billion after selling $18 billion in bonds, partly destined for AI infrastructure. Companies like CoreWeave that lease data center capacity have borrowed heavily to fund expansion. If anticipated revenue fails to materialize, lenders could face substantial losses, potentially creating ripple effects throughout debt markets.
While the current level of AI-related debt isn't sufficient to directly cause a financial crisis, trouble in one sector could indirectly impact others due to financial market interconnections. The US economy's AI dependency represents both a current growth driver and a future vulnerability that requires careful monitoring.
