Overspending on Data Centres Raises Concerns Over AI Bubble

Recent analysis reveals a troubling trend in the United States economy, where investment in data centres and information processing technology is driving almost all of the country’s gross domestic product (GDP) growth. According to Harvard economist Jason Furman, without this spending, GDP growth in the first half of 2025 would have stagnated at just 0.1%.

This finding underscores the vital role of high-tech infrastructure in shaping economic outcomes, as highlighted in a report by Fortune. The publication noted that expenditure on AI data centres exceeded US consumer spending during the same period, indicating a significant shift towards technology-driven economic growth.

Investment Trends and Economic Implications

The overwhelming majority of funds flowing into data centres originates from companies striving to make AI technologies ubiquitous. These organisations have a pronounced interest in promoting AI in ways that encourage adoption among consumers. While earlier promises of AI included addressing major issues like climate change and improving healthcare, the current focus seems to be on applications such as generating essays and creating synthetic media.

Critics argue that many AI implementations lack a clear rationale and often proceed without sufficient justification. This raises concerns that the push for widespread AI adoption stems more from corporate necessity than from genuine consumer benefit. The ramifications of failing to integrate AI could be severe for these companies, potentially jeopardising their financial stability.

Both the Bank of England and the International Monetary Fund have recently cautioned investors about the risks associated with inflated market valuations in the technology sector, particularly regarding AI firms. The Bank of England specifically warned that equity markets appear “stretched” and could face a sharp correction if optimism surrounding AI diminishes.

Environmental Concerns and Ethical Considerations

As the demand for data centres rises, critical issues surrounding copyright, privacy, and environmental sustainability are increasingly overlooked. The construction of resource-intensive data centres contradicts global efforts to achieve net-zero emissions. Many are questioning the ethics of prioritising technological advancement over the well-being of ordinary citizens and the planet.

The discourse surrounding AI often reflects a belief in its transformative potential, yet the reality is far more complex. The phrase “AI slop” has emerged to describe the hasty integration of AI into various processes without thoughtful consideration. This trend highlights the tension between rapid technological advancement and the ethical implications of such progress.

As the tech industry and governments advocate for more energy capacity to support these data centres, the potential trade-off becomes increasingly apparent. The question remains whether future energy resources will favour data centres over essential services for people.

While society may find temporary amusement in AI-generated entertainment, the broader implications of unchecked spending on data centres and AI adoption warrant serious reflection. The balance between innovation and responsibility will be crucial as the world navigates these complex challenges.