What happened to the artificial-intelligence investment boom?

Many economists believe that generative artificial intelligence (AI) is about to transform the global economy. A paper published last year by Ege Erdil and Tamay Besiroglu of Epoch, a research firm, argues that “explosive growth”, with gdp zooming upwards, is “plausible with ai capable of broadly substituting for human labour”. Erik Brynjolfsson of Stanford University has said that he expects ai “to power a productivity boom in the coming years”.

For such an economic transformation to take place, firms need to spend big on software, communications, equipment and factories, enabling AI to slot into production processes. An investment boom was required to allow previous breakthroughs, such as the tractor and the personal computer, to spread across the economy. From 1992 to 1999 American non-residential investment rose by 3% of gdp, for instance, driven in large part by spending on computer technologies. Yet so far there is little sign of an ai splurge. Across the world, capital expenditure by businesses (or “capex”) is remarkably weak.