Overspending on data centres a sign that the AI bubble is about to pop
Does anyone else find this sentence a little bizarre: “US GDP growth in the first half of 2025 was almost entirely driven by investment in data centers and information processing technology.”
Aside from the US spelling of centres, that is. For context, it’s the first sentence of a story on fortune.com headlined Without data centers, GDP growth was 0.1% in the first half of 2025, Harvard economist says. Let’s just pause briefly to note that, as headlines go, that’s a little bit on the long side.
Anyway, the story is based on a calculation by Harvard economist Jason Furman that without spending on data centres and IT, GDP in the US would have been 0.1% which, as Fortune points out, would represent “a near standstill that underlines the increasingly pivotal role of high-tech infrastructure in shaping macroeconomic outcomes”.
Fortune also pointed to estimates by Renaissance Macro Research that the dollar value contributed to US GDP growth by AI data centre expenditure in the first half of 2025 surpassed US consumer spending, which is a really big deal.
So let’s pause for a moment and think about where all that spending on data centres, which is contributing nearly all GDP growth in the US, is coming from. Pretty much all of it is from the companies that are working overtime to make what they call AI (which, let’s face it, can be a very broad term sometimes) all-pervasive across everything we use and do.
So they have a vested interest in making us adopt AI in whatever manifestation is best able to persuade us to use it. Not that long ago, the promise of AI was represented by lofty goals such as helping to tackle climate change or improve health care but now the biggest focus seems to be on using AI to write essays, CVs and job applications and create fake videos and music.
AI is also being incorporated into existing applications and processes, often without any clear rationale for doing so and little, if any, justification or evidence for why it should be included. The suspicion remains that the biggest reason why AI needs to be incorporated as pervasively as possible is because tech companies are spending so much money on it that if AI isn’t adopted at scale, the consequences for their businesses could be devastating.
Meeting expectations
It’s probably worth mentioning here that the Bank of England and the International Monetary Fund both highlighted the dangers of an AI bubble recently. The Bank of England, for example, warned that the risk of a sharp market correction had increased, adding: “On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence” leaving equity markets exposed “should expectations around the impact of AI become less optimistic”.
No wonder many are beginning to wonder if AI is something tech companies are guilty of over-promising and under-delivering. Think about it, there’s a reason why the term ‘AI slop’ exists.
In the rush to try and impose AI upon the world, the tech giants and supportive governments are seeking to trample all over copyright and privacy rights. Not only that, they are completely ignoring the environmental cost of building so many resource-hungry data centres at a time when the world is supposed to be working towards net zero.
Of course, we could delude ourselves with tech’s typical magical thinking and pin our faith on AI helping us to solve the climate crisis. But given the priority which tech companies and certain governments are attaching to energy capacity for data centres at the expense of ordinary people, you have to wonder what conclusion they might come to about where future energy resources should be allocated if it’s a choice between data centres and humans.
Still at least we’ll be able to comfort ourselves by singing along to the AI-created theme song and watching an AI-generated video about it.
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