Unlike prior technological inputs like energy, which required machinery to be useful, AI compute can be added directly to the economy to strengthen it. Simply increasing compute improves product quality and expands user access simultaneously, acting as a direct economic force multiplier without traditional bottlenecks.
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A recent Harvard study reveals the staggering scale of the AI infrastructure build-out, concluding that if data center investments were removed, current U.S. economic growth would effectively be zero. This highlights that the AI boom is not just a sector-specific trend but a primary driver of macroeconomic activity in the United States.
Despite AI's narrative as a labor-replacement technology, NVIDIA's booming chip sales are occurring alongside strong job growth. This suggests that, for now, AI is acting as a productivity tool that is creating economic expansion and new roles faster than it is causing net job destruction.
Agentic commerce isn't just a substitute for existing online shopping. It can unlock new spending from high-income individuals whose primary barrier to consumption is time, not money. By automating purchasing, agents reduce this "time cost of consumption," potentially adding new, incremental dollars to the economy.
In the current market, AI companies see explosive growth through two primary vectors: attaching to the massive AI compute spend or directly replacing human labor. Companies merely using AI to improve an existing product without hitting one of these drivers risk being discounted as they lack a clear, exponential growth narrative.
While an AI bubble seems negative, the overproduction of compute power creates a favorable environment for companies that consume it. As prices for compute drop, their cost of goods sold decreases, leading to higher gross margins and better business fundamentals.
While AI is often viewed abstractly through software and models, its most significant current contribution to GDP growth is physical. The boom in data center construction—involving steel, power infrastructure, and labor—is a tangible economic driver that is often underestimated.
The narrative of AI destroying jobs misses a key point: AI allows companies to 'hire software for a dollar' for tasks that were never economical to assign to humans. This will unlock new services and expand the economy, creating demand in areas that previously didn't exist.
The tangible economic effect of the AI boom is currently concentrated in physical capital investment, such as data centers and software, rather than widespread changes in labor productivity or employment. A potential market correction would thus directly threaten this investment-led growth.
Unlike the dot-com bubble's finite need for fiber optic cables, the demand for AI is infinite because it's about solving an endless stream of problems. This suggests the current infrastructure spending cycle is fundamentally different and more sustainable than previous tech booms.
The current AI investment boom is focused on massive infrastructure build-outs. A counterintuitive threat to this trade is not that AI fails, but that it becomes more compute-efficient. This would reduce infrastructure demand, deflating the hardware bubble even as AI proves economically valuable.
