AI spending draws more money and resources, raising crowding out fears

In short: AI is attracting a growing share of money, chips, and electricity, and some data suggests it may be squeezing other parts of the economy.

What's going on

AI systems need large data centers, which are buildings full of computers that run day and night. Building and running them takes a lot of computer chips, electricity, and financing. That has led to a basic question, is AI pulling limited resources away from other industries, like a popular new store taking most of the shoppers on a busy street.

Some recent numbers point in that direction. Silicon Valley Bank said that in the past 12 months, AI companies received almost two-thirds of US venture capital dollars, which is money investors put into young, risky companies. Goldman Sachs said about a quarter of US “investment-grade” corporate bond issuance this year came from AI-related companies, including big cloud firms and software providers.

There are also signs in real-world construction and equipment spending. The Financial Times column notes that investment in AI-related areas like information-processing equipment and data centers rose over the last year, while other types of private investment fell. Within office construction, data center spending has surged while the rest has weakened.

What to watch

The evidence does not prove that AI is truly starving other sectors of funding. Some analysts argue AI could be boosting total investment, not just shifting it around. Researchers at the Bank for International Settlements found that countries more prepared for AI also saw stronger growth in overall business investment through the end of 2025.

Still, watch borrowing costs and energy constraints. Goldman Sachs analysts estimated any credit squeeze on non-AI firms may be small so far. But if AI investment keeps rising, including an estimate that US AI investment could grow from 1.8 to 2.8 percent of GDP by 2028, the pressure could become easier to spot.

Source: Financial Times