UBS Economics-Global Economic Perspectives _How much is the AI boom contri...-117740117

ab12 September 2025Global ResearchGlobal Economic PerspectivesHow much is the AI boom contributing to US growth?AI-related investment contribution to growth is up, but not unprecedentedRecent commentary has suggested that much of the real growth in the past six months in the US owes to firms' massive investments in artificial intelligence (AI). Figure 1 shows how the contribution to real GDP growth from investment in information processing equipment in the first half of this year is now on par with the contribution from household spending, whose share in GDP is an order of magnitude larger (2% versus 68%). This in turn has fueled optimism that the ramp-up in AI capex could perhaps offset tariff headwinds and cushion the US economy from a possible downturn.(1)However, on closer inspection, the argument looks somewhat specious. First, despite the increase in spending on computers/chips, the contribution of non-residential investment (which includes AI spending) looks completely ordinary from a long run (35-year) perspective (Figure 2). Second, although the broader measure of nonres fixed investment indeed has recently overtaken PCE as greater contributor to growth, this owes more to household spending growth in the first half of this year being at a historically low level (outside of formal recessionary periods).While broader AI capex is up, other non-AI investment is contractingAI capex straddles several dimensions of nonresidential fixed investment (equipment, structures, and intellectual property). Figure 3 splits out the relevant AI-related equipment components from the rest: computers and peripherals, communications equipment and specialized electrical and industrial machinery. We also single out software and R&D, historically large contributors in which AI is reflected. The mapping of AI into these categories is imperfect—plenty of computer equipment, software and R&D investment is for other purposes—but this is as close as we can get at this level of national accounts disaggregation. Both AI-related equipment and software+R&D are expanding rapidly in the national accounts, with their growth contribution swinging up 75bps and 45bps, respectively on a 2-quarter average basis since 24Q4. However, that swing is offset 20bps by other non-AI related forms of investment (the 'grey' category tallies all other equipment and structures, about half of total nonresidential investment) which have been contracting for 6 months. Figure 5 breaks out that non-AI investment. The Biden Administration's fiscal policies boosted the contribution of manufacturing structures (green), which has now petered out. The structures expensing provision in the OBBBA could support investment but it will take time to show through to the data.Data centers (structures) are so far largely irrelevant as a growth contributorDespite predictions of massive investments in data centers, so far, that category—the structures themselves, not the equipment and software they c