AI investment boom now trails the 1990s tech cycle

AI-related capital spending has risen 1.2% of GDP since the first quarter of 2020, surpassing the investment pace of the 1970s oil boom and the 2010s shale expansion at comparable stages, according to BofA Global Research.

This leaves only the 1990s technology cycle — which reached about 1.5% of GDP over an equivalent period — ahead of it.

The numbers behind the BofA comparison are striking in isolation, but the real-economy footprint makes them more so. A Federal Reserve study found that data center spending on plant and equipment contributed roughly 0.20 percentage points to U.S. GDP growth in 2025 and is contributing 0.40 percentage points to GDP growth in 2026.

Data centers now account for nearly 46% of private office construction spending, up from under 5% a decade ago, and Stanford SIEPR researchers estimate the construction pace supports roughly 304,000 American manufacturing jobs.

BofA estimates global data center outlays will hit $1 trillion this year and more than double to $2.1 trillion by 2028, implying a 37% compound annual growth rate from 2025 to 2030.

Goldman Sachs puts the five-firm hyperscaler consensus for 2026 capex at roughly $800 billion, up 52% from its $527 billion estimate from December 2025.

Amazon is guiding $200 billion to $220 billion, Alphabet $195 billion to $205 billion, Microsoft $175 billion to $190 billion, Meta $130 billion to $145 billion, and Oracle $50 billion to $70 billion.

Morgan Stanley expects hyperscaler capex growth to slow from roughly 100% year-over-year in 2026 to 60% in 2027 and then 14% in 2028. But the firm's equity strategist Nicholas Lentini cautioned against reading deceleration as deterioration:

"We expect these companies to continue to see upward revenue and earnings revisions from the ongoing AI capex boom even if hyperscaler/neocloud capex revisions moderate."

Morgan Stanley also noted that Wall Street had consistently underestimated the cycle, actual capex growth topped 50% in both 2024 and 2025 despite initial forecasts of around 20%.