What Investment Data Implies about the AI Transition
Five U.S. technology firms account for the majority of AI infrastructure investment, spending $404 billion (2022 dollars) in 2025, with nearly double that forecast for 2026. These firms risk bankruptcy unless expected profits grow commensurately. We embed this observation in a two-sector model with rare productivity booms. We calibrate the boom size to investment through 2026, implying that AI-sector productivity roughly tripled. We then add a two-year window with a 50% annual probability of another such boom. The implied GDP gain by 2030 ranges from 7% to 53%, with AI shares of GDP ranging from 8% to 36%.
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Copy CitationJessica A. Wachter and Jonathan D. Wachter, "What Investment Data Implies about the AI Transition," NBER Working Paper 35290 (2026), https://doi.org/10.3386/w35290.Download Citation
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