AI Drives 92% of US GDP Growth Amid Bubble Fears

The United States economy has become overwhelmingly reliant on artificial intelligence, with Harvard economist Jason Furman revealing that AI investments accounted for 92% of GDP growth in the first half of 2025. This unprecedented concentration means, as Ruchir Sharma of Rockefeller International told Fortune, ‘America has become one big bet on AI.’ The stakes couldn’t be higher—if AI fails to deliver, the U.S. economy and markets ‘will lose the one leg they are now standing on.’

Simultaneously, the Bank of England has raised serious concerns about market valuations, warning that ‘equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence.’ The central bank’s analysis draws direct parallels to previous market excesses, noting that ‘when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.’ This concentration is stark—the top ten S&P 500 companies now command more than one third of the index’s total valuation, a level not seen in half a century.

Proponents of the AI revolution point to substantial financial metrics that distinguish current conditions from the dot-com bubble. Unlike the ‘vapor-ware companies of 1999,’ today’s AI giants are generating massive profits. As financial analyst Steven Fiorillo noted, Microsoft, Amazon, Google, and Meta generated $493.31 billion in cash from operations, allocated $291.35 billion in capital expenditure, and produced $201.96 billion in free cash flow over the trailing twelve months. ‘These numbers indicate that the dot com era and the A.I. era are very different,’ Fiorillo argued.

The infrastructure supporting AI growth is both substantial and tangible. Data centers are humming with activity, power generation facilities are expanding, and adoption rates are soaring—almost 90% of developers are using AI today, with generative AI adoption more than doubling within a year. Nvidia’s stock has spiked 1,700% in the last two years, while OpenAI is targeting $12.7 billion in revenue for 2025. UBS Chief Investment Officer wrote that ‘there is little evidence of a market bubble at present,’ recommending investors ‘benefit from AI-driven momentum in the stock market with a broadly diversified portfolio.’ Bank of America analysts similarly argue that current volatility signals healthy markets rather than bubble conditions.

Skeptics counter with historical precedent and practical limitations. The Bank of England’s comparison to dot-com valuations is based on hard metrics, and tech leaders themselves are expressing concerns. OpenAI CEO Sam Altman said in August, ‘Are we in a phase where investors as a whole are overexcited about AI? my opinion is yes.’ He added that ‘when bubbles happen, smart people get overexcited about a kernel of truth.’ Amazon’s Jeff Bezos was even more direct, calling the current environment ‘a kind of industrial bubble’ that will inevitably see ‘a reset, there will be a check at some point, there will be a drawdown.’

Practical bottlenecks threaten to slow the AI revolution regardless of its transformative potential. Power shortages, chip supply constraints, and the physical challenges of cooling servers present real limitations. Meanwhile, MIT researchers found that 95% of organizations are failing at their Generative AI investments, raising questions about whether current enthusiasm outpaces practical implementation. The circular nature of some investments—such as Nvidia reportedly investing up to $2 billion in Elon Musk’s xAI deal, essentially paying for priority access to its own chips—further fuels concerns about irrational market behavior.

The reality likely exists in the murky territory between these opposing views. AI’s transformative power is undeniable—any technology that can account for 92% of economic growth represents more than mere hype. The massive investments in companies like Nvidia, AMD, and Oracle, along with the $20 billion raised by Elon Musk’s xAI for its ‘Colossus 2’ data center, reflect genuine belief in AI’s potential. The profitability of the ‘Magnificent Seven’ tech companies provides a fundamental basis for optimism that distinguishes current conditions from the dot-com era.

Yet the concentration risk remains profound. With so much wealth tied to so few companies and the entire U.S. economic expansion dependent on AI’s continued success, the stakes have never been higher. As the debate between bulls and bears intensifies, the ultimate truth about whether AI represents a sustainable revolution or dangerous bubble will be revealed not in market valuations but in whether the technology can continue delivering tangible economic results that justify the extraordinary expectations placed upon it.