Just How Big is the AI Buildout - and How Risky?

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A new Brookings Institution study notes the "strikingly physical" economic footprint of AI's buildout, from specialized chips and electricity to purpose-built data centers. (Two-thirds of a data center's costs are IT equipment, with one-third going to real estate and its associated power infrastructure.) "At an average of 3.63 percent of GDP per year, the projected buildout would be larger relative to the economy than the major U.S. canal, railroad, electrification, highway, and telecommunications investment booms." This is pushing up prices for workers, electricity, and even commercial real estate (as well as consumer products that use chips), notes the Wall Street Journal, and reducing the construction on new houses and apartment buildings. And in addition, the paper points out, projections for this buildout "would double the electricity consumption of the entire U.S. residential sector." The calculations come from Columbia Business School finance/real estate professor Stijn van Nieuwerburgh — and Reuters explains their significance: Just as the rail and telecoms expansions led to notable bubbles and busts, Van Nieuwerburgh wrote that the extent of the buildout, the still-unteste