U.S. Tech AI Spending Drives Economy, But Sustainability Questions Loom

This year, American technology companies have been racing to invest heavily in the field of artificial intelligence (AI). The scale of AI expenditure is so large that it may be driving the overall U.S. economy, not just the stock market.

In a report released on Tuesday, the head of global foreign exchange research at Deutsche Bank highlighted that without a significant increase in AI capital expenditure by U.S. tech companies this year, the U.S. economy would be in or near recession.

The day before this report, NVIDIA announced a 100 billion investment in OpenAI. OpenAI is utilizing NVIDIA's hardware to build and expand data centers. Later that same day, OpenAI, Oracle, and SoftBank announced plans to construct five new AI data centers in the U.S. to advance their ambitious "Stargate" project. Including other expansion and new construction projects by OpenAI, this initiative is expected to attract over 400 billion in investment over the next three years.

However, there are concerns about the sustainability of AI spending. The head of global foreign exchange research at Deutsche Bank questioned what would happen once the massive capital expenditure begins to slow down.

"The bad news is that to keep the tech cycle contributing to GDP growth, capital investment needs to maintain a parabolic trajectory. This is highly unlikely," the report stated.

As investors prepare for the economic transition in 2026 and view AI as a driver of economic growth and stock market returns, this raises some challenging questions. Growth in 2025 will be driven by the construction of underlying AI infrastructure, but these projects will eventually be completed.

"Once the factories are built, will the productivity gains from AI take over and dominate? And how widely will these benefits spread globally compared to the location of the factories themselves?" the report asked.

Deutsche Bank has not yet answered these questions, but its analysts are incorporating these considerations into their outlook for the dollar's trajectory over the next year.