The vast investment in AI infrastructure has reached a milestone in the U.S. economy: spending on information technology equipment has surpassed residential investment, as tech giants commit trillions of dollars to data centers and AI computing.

According to the Bureau of Economic Analysis, inflation-adjusted spending on information-processing equipment reached $752 billion in the second quarter of 2026, compared with $748 billion in residential investment.

Spending patterns for housing and technology have headed in opposite directions: Since early 2021, residential investment has declined 18%, while spending on information-processing equipment has grown 51%.

The shift is particularly significant because housing has been a key driver of U.S. economic growth. Yet high borrowing costs have limited residential construction, while tech companies have invested heavily in AI infrastructure despite elevated interest rates.

AI Infrastructure Spending Could Reach $10.3 Trillion

The current investment cycle could reshape the U.S. economy for years. Economist Stijn van Nieuwerburgh estimates that spending on data centers and related AI infrastructure will total $10.3 trillion between 2025 and 2032, according to research published by the Brookings Institution.

Remarkably, that would represent an average annual investment equivalent to 3.6% of U.S. GDP. The largest tech players account for much of the spending. S&P Global Ratings projects that combined capital expenditures by Microsoft, Alphabet, Amazon, Meta, Oracle and SpaceX will exceed $1.3 trillion in 2027, compared with $870 billion in 2026 and $470 billion in 2025.

For perspective, Goldman Sachs estimates that AI investment will represent 1.9% of U.S. GDP in 2026. Apollo Global Management chief economist Torsten Slok has calculated that the current AI investment cycle is expanding at nearly twice the pace of the housing boom at its peak.

The economic benefits may extend beyond the tech sector. Reports on job growth in the AI era are mixed, but LinkedIn estimates that AI generated more than 750,000 U.S. jobs between 2023 and 2026. Approximately 117,000 data center jobs have been added since the beginning of 2024, excluding construction positions.

The median salary advertised for AI-related positions is approximately $180,000, compared with $80,000 across all job listings.

Construction spending also highlights the shift. Private data center construction totaled $37 billion during the first seven months of 2026, approximately $9 billion above the comparable period in 2025.

However, the expansion is creating fierce competition for resources, given that data centers require large amounts of electricity, specialized construction workers and land. These requirements boost costs for manufacturers and other businesses competing for the same resources.

Demand for data center equipment, particularly memory chips, is also contributing to higher tech prices. U.S. import prices for computers, peripheral equipment and semiconductors were 20% higher in August than a year earlier. Tech companies have increasingly used debt to finance data centers, which creates additional exposure for banks and private-credit firms.

The gargantuan spending raises a central question: Will AI generate enough revenue to justify the investment? S&P Global Ratings projects that all six companies will generate negative free operating cash flow in 2026 and 2027. The firm forecasts that revenue growth will accelerate in 2028 as capital expenditure growth moderates, with a recovery in free operating cash flow projected for 2029