AI investment boom now trails the 1990s tech cycle

Summary

• The current AI investment surge has surpassed the comparable stages of the 1970s oil & 2010s shale booms, leaving only the 1990s technology cycle ahead of it.
• Since the first quarter of 2020, AI-related capital spending has increased by roughly 1.2% of GDP, compared with about 1.5% during the equivalent period of the 1990s tech expansion.
• Data centers have become an important source of US economic growth, supporting construction, manufacturing, & income even as hiring has weakened elsewhere.
• Strong hyperscaler spending & a substantial pipeline of data center projects suggest the AI buildout still has room to run despite a likely moderation in the pace of investment.
• The AI investment cycle is defined by capital spending in computers & peripheral equipment, software, & data centers.
• The 1990s tech cycle is defined by capital spending in communication equipment, computers & peripheral equipment, communication facilities, & software.
• The 1970s oil cycle is defined by capital spending in mining shafts & wells, mining & oilfield machinery, & petroleum & natural gas wells.
• The 2010s shale cycle is defined by capital spending in mining shafts & wells, mining & oilfield machinery, & petroleum & natural gas wells.