Peter Smith
● Ben Bajarin recently pointed out that "buildouts are different than bubbles," emphasizing how today's AI infrastructure boom represents real industrial growth, not just hype. Data from Melius Research backs this up: AI data center construction is quickly becoming a major capital investment cycle that could soon match some of America's most transformative infrastructure periods.
● The numbers tell the story. Melius Research shows AI capital spending was barely 0.1% of U.S. GDP in 2020, but it's expected to hit nearly 2% by 2025. To put that in perspective, railroad construction in the 1880s was about 6% of GDP, electrification in the 1920s reached 4%, and Cold War military spending peaked around 3%. AI infrastructure is shaping up to be one of the biggest investment waves since the 1800s.
● What's driving this? Massive data center construction to power AI — everything from training large language models to running them. Tech giants like NVIDIA, Microsoft, and Google are pouring tens of billions into new AI facilities, advanced cooling systems, and heavy-duty power infrastructure. Yes, there are concerns about energy consumption and supply chains, but analysts see this as a fundamental economic shift, not a bubble.
● Historically, these kinds of buildouts change everything. Railroads connected the nation, electricity revolutionized industry, and now AI data centers are becoming the foundation of the digital economy.
Peter Smith
