The United States is in the throes of an AI-driven industrial boom. While China builds through central planning and 5-year plans, America is now relying on the invisible hand of the market to
transform its power grid and equip the country’s economy for the AI age.
This frenzy of investment is propelling tech stocks to record highs, while straining the grid, fueling community resistance, and raising an important, and perhaps, defining question -is this the dawn of a new industrial age, or a speculative bubble with a massive energy bill?
When Donald Trump recently praised China’s speed in building new infrastructure - “In China, they do it very quickly. They have one person that says, ‘Do it,’ and that's it,”- he was tapping into a growing anxiety that the U.S. may fall behind China. He quickly reassured attendees that now “we have one person that says, ‘Do it.’ And we've given that order,” meaning himself.
Of course, the U.S. economy doesn’t work by decree. But even without a strongman running the show, the U.S. is undergoing a profound transformation as Tech Giants and Wall Street investors underwrite a massive transformation to America’s energy grid, which has fueled a record stock market run and laid the groundwork for a new digital age.
A healthy dose of innovation, speculation and irrational exuberance – this is AI done the
American Way.
The AI boom has already propelled the stock market to new highs, while concentrating the wealth in the hands of a few big companies. With a $4.3 trillion market cap, chipmaker NVIDIA
is the largest company in the world, and bigger than all of Germany’s public companies combined.
Just how much are we investing in AI infrastructure? According to consultancy
McKinsey, “By 2030, data centers are projected to require $6.7 trillion worldwide to keep pace with the demand for compute power.” This kind of spending is bound to impact and reshape the economy. According to the recent GDP figures,
AI data center buildout contributed more to economic growth than all U.S. consumer spending.
Big Tech sees AI as its next profit engine. Now Wall Street wants in. After years of buying up vast housing tracts, office buildings, and public and private companies, private equity firms like Blackrock, KKR and Brookfield are concentrating their efforts on building up data center assets in communities across the country. And this is not just confined to America. Per Franzen, CEO of European private equity giant EQT
said he expects data center investments and loans to be the biggest part of their business. Perhaps this flood of private capital will help Europe and the U.S. match China’s state-subsidized model.
The AI buildout is causing a reckoning in other areas too. The White House may call climate change a hoax, but the
vast majority of Americans agree with the scientific consensus that it’s real, and support government efforts to reduce emissions. Will we abandon the fight against climate change, or will this new industrial revolution kick start a halcyon age of clean energy development that both meets AI’s power needs and propels us to a greener future? AI is catalyzing many green energy projects and kickstarting a nuclear renaissance, but coal fired power plants are ramping back up too.
And even if we take an all-of-the-above approach to energy, can we even build enough in time? In
a June report, Deloitte said "The scale of AI data centers and their commensurate power needs are growing exponentially,” adding that by 2035, power demand from AI data centers in the United States could grow more than thirtyfold, reaching 123 gigawatts, up from 4 gigawatts in 2024." Power companies all cite
grid stress as the leading challenge for data center infrastructure development.
A study from
the International Energy Agency said that the world will add another Japan worth of energy usage from data centers alone by 2030, while in the U.S, data centers will account for half the growth in electricity demand this decade.
Power demand
surged by 4.3% last year (more than double the annual average rate of the past decade) and power utilities are responding to demand. Dominion will spend $50 billion to expand Virginia’s grid. And American Electric Power is courting tech giants across Texas and Ohio. In Canada, Hydro One and Brookfield, one of the largest infrastructure investors in the world are trying to capture rising demand, with Brookfield already signing a 10.5 gigawatt renewable contract with Microsoft. Brookfield CEO Bruce Flatt said, “We believe AI infrastructure is one of the defining investment themes of the decade.”
To be sure, AI Datacenters can be a boon to local communities and a lifeline to a labour market that has seen an exodus of good blue-collar jobs. But not everyone is happy about them. “I planned on staying here until I died,”
said 60 year old Richard Andre Newman of Fairfax County, Virginia in an interview with the Associated Press, “until this came up.” The “this” refers to Plaza 500, a colossal 466,000 square foot data centre a stone’s throw from a neighborhood in his community.
A recent Business Insider
article proclaimed that data center projects are “pitting neighbour against neighbour” and encroaching on communities, saying, “a third of the operating data centers in the state are sited within 200 feet of residential areas." And according to a report from Data Center Watch cited in a recent Bloomberg article, “What was once quiet infrastructure is now a national flashpoint.” The group “found that $64 billion in data center projects were blocked or delayed in 24 states over the last two years due to local opposition."
With all these forces at play, Can the U.S. keep pace with China, its chief rival? China’s economic system has many flaws but one advantage of a command and control system is that infrastructure projects get built fast.
“Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,”
said OpenAI CEO Sam Altman, adding “Is AI the most important thing to happen in a very long time? My opinion is also yes.”
This duality captures our current moment. Despite AI’s immense potential, concerns about a bubble are growing. Already,
just seven companies in the U.S. account for 1/3 of all private sector capital spending - and that’s almost entirely datacenters.
What happens when they turn off the spigot? Construction spending boosts GDP and adds jobs, but once operational, datacenters require relatively few staff. Last week’s job report (Sept 5
th) shows a weak labor market, despite the AI boom.
Then there is the risk to the stock market, where concentration is near a record high. Nvidia now represents 8% of the S&P500. Tech stocks, as of July,
accounted for 34 percent of the S&P 500 and valuations for some leaders are nearing dot-com levels. As Derek Thompson wrote recently, “in the last two years,
about 60 percent of the stock market’s growth has come from AI-related companies, such as Microsoft, Nvidia, and Meta. Without the AI boom, stock market returns would be putrid.”
What happens when the AI mania ends but the infrastructure remains? Many investors may lose out, but as a society and economy we may be better for it.
After all,
not all bubbles are bad.
In the 19
th century, railroad speculation fueled a boom-and-bust cycle that helped connect a continent and underpin the age of American industrial ascendence. More than a century later, the Dot-Com mania fueled a multi-billion-dollar effort to lay high speed fiber-optic cable across oceans and continents. Neither would have been possible without a little irrational exuberance. As hedge fund billionaire Ray Dalio has said “there’s a major new technology that certainly will change the world and be successful,” but don’t confuse a successful technology with a successful investment.
September 19, 2025
