\u201cI won\u2019t go into particular names,\u201d Powell told reporters after the Fed\u2019s policy meeting, \u201cbut they actually have earnings.<\/p>\n
\u201cThese companies \u2026 actually have business models and profits and that kind of thing. So it\u2019s really a different thing\u201d from the dotcom bubble, he added.<\/p>\n
The comments mark what seems like Powell\u2019s most direct acknowledgment yet that AI\u2019s corporate build-out\u2014spanning hundreds of billions of dollars in data center and semiconductor investments<\/a>\u2014has become a genuine engine of U.S. growth.\u00a0<\/p>\n A productivity play, not a rate-sensitive one<\/p>\n Powell emphasized that the explosion of AI spending isn\u2019t being driven by monetary policy\u2014or by cheap money.<\/p>\n \u201cI don\u2019t think interest rates are an important part of the AI or data center story,\u201d he said. \u201cIt\u2019s based on longer-run assessments that this is an area where there\u2019s going to be a lot of investment, and that\u2019s going to drive higher productivity.\u201d<\/p>\n That remark cuts against one market narrative that loosening financial conditions might be fueling an asset bubble in tech. Instead, Powell suggested that the AI build-out is more structural: a bet on the long-term transformation of work. From Nvidia<\/a> on track to see half a trillion dollars in revenue<\/a> to Microsoft\u2019s and Alphabet\u2019s multi-hundred-billion-dollar capital expenditure<\/a> plans, the scale is unprecedented. But, in Powell\u2019s telling, it\u2019s also grounded.<\/p>\n Goldman Sachs agrees.<\/a> In a research note titled \u201cThe AI Spending Boom Is Not Too Big,\u201d chief U.S. economist Joseph Briggs argued that \u201canticipated investment levels are sustainable, although the ultimate AI winners remain less clear.\u201d\u00a0<\/p>\n Briggs and his team estimated that the productivity unlocked by AI could be worth $8 trillion in present value to the U.S. economy, and potentially as much as $19 trillion in high-end scenarios.<\/p>\n \u201cWe are not concerned about the total amount of AI investment,\u201d the Goldman team wrote. \u201cAI investment as a share of U.S. GDP is smaller today (<1%) than in prior large technology cycles (2%\u20135%).\u201d In other words, there\u2019s still plenty of room to run.<\/p>\n Powell\u2019s framing echoes that view: The AI race, while frothy at times, is being financed mainly through corporate cash flow rather than speculative debt.<\/p>\n A real-economy impact<\/p>\n Powell noted that the investment wave is showing up in the real economy. \u201cIt\u2019s the investment we\u2019re getting in equipment and all those things that go into creating data centers and feeding the AI,\u201d he said. \u201cIt\u2019s clearly one of the big sources of growth in the economy.\u201d<\/p>\n Those remarks align with private-sector estimates. JPMorgan economists have projected<\/a> that AI-related infrastructure spending could add up to 0.2 percentage points to U.S. GDP growth over the next year, roughly the same annual boost that shale drilling delivered at its peak.<\/p>\n The boom has already pushed industrial power demand<\/a> to record levels and forced utilities to fast-track grid expansion, confronted with the realities of a too-slim grid. The AI boom isn\u2019t just reflected on paper, in other words: Powell is talking about cranes, concrete, capital goods.\u00a0<\/p>\n Not without caution<\/p>\n Still, Powell didn\u2019t give AI a free pass. He stressed that while the current investment surge looks healthy, it\u2019s too early to call it a permanent productivity revolution.<\/p>\n \u201cI don\u2019t know how those investments will work out,\u201d he said.\u00a0<\/p>\n For all its promise, the AI economy is unevenly distributed<\/a>: capital-intensive and concentrated among a handful of firms. Economists warn that productivity gains from AI will take years to filter through the broader workforce, and that automation could suppress hiring in sectors now driving demand.<\/p>\n Powell acknowledged as much when he noted that many recent layoff announcements<\/a> from major corporations<\/a> \u201care talking about AI and what it can do.\u201d There\u2019s an irony, there: The same technology boosting output may also slow job creation\u2014one of the central bank\u2019s two mandates. <\/p>\n Powell noted that job growth, adjusted for statistical overcounting, is now \u201cpretty close to zero.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"\u201cI won\u2019t go into particular names,\u201d Powell told reporters after the Fed\u2019s policy meeting, \u201cbut they actually have…\n","protected":false},"author":2,"featured_media":260025,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,181,507,70488,2788,2800,57157,9007,2938,8624,4321,30134,74],"class_list":{"0":"post-260024","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-bubbles","12":"tag-data","13":"tag-federal-reserve","14":"tag-goldman-sachs-group","15":"tag-interest-rates","16":"tag-jerome-powell","17":"tag-jpmorgan-chase","18":"tag-nvidia","19":"tag-tech-bubble","20":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/260024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=260024"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/260024\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/260025"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=260024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=260024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=260024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}