Overspending on Data Centres Fuels Concerns Over AI Bubble

On October 10, 2025, a report highlighted that investment in data centres and information processing technology has significantly influenced the United States’ economic growth. According to Harvard economist Jason Furman, this sector was responsible for nearly all of the GDP growth in the first half of 2025. Without this spending, the GDP would have been just 0.1%, indicating a near standstill in economic activity.

This situation underscores the crucial role of high-tech infrastructure in shaping macroeconomic outcomes. A study by Renaissance Macro Research revealed that expenditures on AI data centres outpaced US consumer spending, marking a significant shift in economic priorities. With these investments dominating growth, questions arise about the sustainability of this trend and its implications for the broader economy.

AI Spending and Economic Risks

The surge in data centre spending is largely driven by technology companies eager to promote their AI solutions across various sectors. These businesses have a vested interest in ensuring widespread adoption of AI technologies, which often leads to an array of applications—from writing essays and creating music to generating deepfake videos.

Previously, AI was associated with ambitious goals like combating climate change and enhancing healthcare. Now, however, the focus has shifted towards more consumer-oriented functionalities. This pivot raises concerns about whether the integration of AI is genuinely beneficial or primarily motivated by the significant investments companies have made in the technology.

Both the Bank of England and the International Monetary Fund have recently cautioned about the potential consequences of an AI bubble. The Bank of England noted a heightened risk of market correction, pointing out that equity market valuations for tech companies focused on AI appear stretched. Should expectations regarding AI’s impact falter, equity markets could face significant turmoil.

The Broader Impact of Data Centres

Concerns regarding the environmental impact of constructing numerous energy-intensive data centres are also rising. As the world aims for net-zero emissions, the prioritization of energy resources for these facilities raises ethical questions about the allocation of energy. With tech giants pressing for more capacity to power AI applications, the potential trade-off between supporting data centres and serving human needs becomes increasingly apparent.

Critics argue that the rush to adopt AI may lead to violations of copyright and privacy rights. The term “AI slop” has emerged to describe the often haphazard manner in which AI is integrated into existing applications without clear justification or rationale. As technology companies and supportive governments advocate for rapid AI adoption, the consequences of their actions may overshadow the initial promise of the technology.

As the dialogue around AI continues, many are left wondering if the promises made by tech companies will be fulfilled or if they are guilty of over-promising while under-delivering. With a growing awareness of these challenges, stakeholders across industries will need to navigate the complexities of AI investment and its potential long-term ramifications for the economy and society at large.