AI capital spending is outpacing previous booms
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CHART 1 • AI capital spending is outpacing previous booms
AI hyperscaler capital spending has exploded since 2023. Investment has risen faster than during any of the other booms shown in this chart, including the construction of Britain’s canal systems, British railways, the boom of the 1920s and the dotcom era.
In just three years, hyperscaler spending has increased to roughly four or five times its starting level.
Source: The Economist
The largest technology companies are racing to secure scarce AI computing capacity before the commercial returns are fully proven. That is not entirely different from previous technological booms, when investors poured money into new infrastructure before it was clear who would profit from it.
What makes the AI boom unusual is the sheer speed and scale of the investment.
This pressure comes from the belief that only a small number of AI platforms will eventually dominate the market. Falling behind could therefore be financially disastrous. This gives the largest technology companies a powerful incentive to commit enormous sums to data centres, chips, energy infrastructure and long-term supply agreements, even before they know whether the returns will justify the cost.
Paid subscribers get access to the other four charts: Big Tech bond spreads, Tesla’s thin operating margin, Palantir’s commercial growth and Apple’s services engine. Together, they show where the AI investment cycle is creating financial strain and where it is producing real operating leverage.
