A handful of hyperscalers and a borrowing boom

A small group of technology companies: Microsoft, Meta, Alphabet, Oracle, and Amazon is expected to spend USD 4.2 trillion over the four years through the end of 2029, according to FactSet estimates.

The concern is not just the size of the spending but how it is being financed. Hyperscalers are increasingly turning to debt, and Van Nieuwerburgh notes that technology companies are using off-balance-sheet entities and other financing structures to borrow from banks and private credit firms.

These arrangements, he writes, can make the underlying exposures difficult to assess. The Brookings paper identifies specific structures in use: joint ventures, private credit, securitizations, and special-purpose vehicles.

What worries the economist is not the technology sector alone. If AI fails to generate enough revenue to support the debt raised to build data centers and related infrastructure, the effects could reach into the broader financial system.

The biggest infrastructure cycle in American history

The spending those financing structures support is, by the study's projection, of historic scale. Total investment in data centers and related AI infrastructure is projected to reach USD 10.3 trillion between 2025 and 2032, an annual average equivalent to 3.6% of U.S. GDP.

A Brookings analysis projects that investment in data centers and related AI infrastructure could reach USD 10.3 trillion between 2025 and 2032. The projected investment covers data center buildings, power systems, networking infrastructure, specialized chips, and other equipment.

The analysis estimates that this investment could average around 3.63% of U.S. GDP annually during the period.

Labor, land, and power under strain

While the money flows through financial markets, the physical buildout is reshaping resource markets on the ground. Data centers are consuming an increasing share of the workforce and the electricity supply, potentially raising costs for other businesses.

The Federal Reserve Bank of Richmond has reported that data center construction is straining labor supplies in its region. Land is another contested resource.

In areas where large numbers of data centers are being built, demand for land can push up prices and compete with other industries, including manufacturing. In communities hosting large data center projects, the increased demand for electricity is contributing to higher power costs.

The jobs boom on the other side of the ledger

The same construction wave that is straining labor supplies is also generating employment at a remarkable pace. LinkedIn estimates that more than 750,000 AI-related jobs were created in the United States between 2023 and 2026, a figure that helps offset some of the disruption AI is causing in the broader labor market. These positions pay well.

The median advertised salary for AI-related jobs on LinkedIn is about USD 180,000, compared with USD 80,000 across other roles.

The demand extends beyond software engineers. In the Washington, D.C., area, the number of unionized electricians has risen from about 9,000 to 17,500 in recent years as data center construction has accelerated, evidence that the boom is pulling in skilled trades alongside technical talent.

Unresolved questions about a downturn

Taken together, the figures describe an investment cycle that is simultaneously creating hundreds of thousands of jobs, driving up stock-market wealth, and straining labor markets, land prices, electricity supplies, and interest rates.

What remains unresolved, per the Brookings study, is whether the financial system can absorb a downturn in the cycle without correlated losses spreading across companies and institutions.

The answer hinges on factors the study does not resolve: whether AI generates sufficient revenue to service the debt raised to build the infrastructure and under what conditions losses at individual projects could propagate through the banking system and private credit markets.

What the available numbers do make clear is the magnitude of what is under construction: USD 10.3 trillion in projected investment, USD 4.2 trillion of it from five companies, financed increasingly through structures that make exposures difficult to assess, all against a backdrop of rising power costs, tighter labor supplies, and record equity wealth.