The high stakes of the global AI infrastructure race

Heavy investment in AI raises critical issues: bubble risks, few jobs, huge energy consumption, plus Trump & sons self-dealing. Do the positives outweigh the negatives?

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The US economy has been undergoing a profound transformation in recent years. An extraordinary amount of the nation’s goods and services are produced by a small group of seven big tech companies – Google, Apple, Microsoft, Amazon, Nvidia, Meta/Facebook, and Tesla, otherwise known as the Monopoly Seven.

In the first half of 2025, these seven companies accounted for nearly all economic growth in the United States, and projections estimate that trend will continue into 2026. Without Big Tech, growth would have slowed to just 0.1% annually. These companies now make up nearly one third of the total value of the US stock market. They have become so central to the overall economy that they determine employment trends and investment decisions. Their domination of the stock exchanges means that a significant portion of American wealth, including retirement accounts, is dependent on their performance.

Tech expert Paul Kedrosky notes that these companies’ ever-bigger share of the pie are “eating the economy”, much like the railroad barons and monopolies did in the late 19th century. With such a narrow, tech-focused economic engine, it means America’s future growth will be highly dependent on the spending decisions of these handful of companies, the seven Data Barons who have hooked the national economy like a junkie on their brand of Surveillance Capitalism.

And that’s worrisome. With the sudden surge in investment in AI, money is being thrown around like drunken sailors on a shoreside binge. And for the last ten years, that wild spending has become the prime catalyst for investment and growth of the US economy, creating some jobs and destroying many others. What happens if that investment turns out to be the latest financial bubble, and the spending suddenly collapses? If that occurs, not just the US economy but the European and global economies may well buckle like they did following the housing bubble collapse in 2008.

Is AI investment turning into a bubble?

The big Silicon Valley companies are investing heavily, but it’s not just on the AI technology itself. They also are mega-investing in gargantuan data centers and server farms that are the infrastructure backbone of this development. Google, Amazon, Meta/Facebook and Microsoft collectively spent around $400 billion on AI in 2025. Morgan Stanley analysts estimate that big tech companies will invest about $3 trillion on AI infrastructure through 2028. This is a massive influx of capital that is currently replacing consumer spending and traditional manufacturing as the main engine of US economic expansion.

Here’s what’s troubling about the latest rounds of AI investment. To avoid burning up their own cash, instead these companies are taking on large amounts of debt to cover about half of the needed investment. A Goldman Sachs assessment found that key tech firms have taken on $121 billion in debt over the past year, a more than 300% uptick from the industry’s typical debt load. Silicon Valley is taking on all this new debt with the assumption that massive new revenues from the invention of new AI-based products and services will cover the tab. But there is reason for doubt.

For example, the leading AI innovator, OpenAI, claims that it is planning to spend $1.4 trillion over the next eight to ten years on AI data centers and infrastructure, but its current annual revenue is no more than $20 billion. Most experts are in agreement that the current pace of investment in AI infrastructure far exceeds any foreseeable returns. The numbers just don’t add up.

It sounds like a pyramid scheme, reminiscent of the circular funding during the dot-com bubble.

In the meantime, not just the level of debt but the type of debt and financing that these companies are taking on is causing major concern. It goes by odd names like “circular funding” and “special purpose vehicles,” which sound reminiscent of the shaky financial practices used leading up to the housing bubble in 2007-8.

For example, recently Nvidia pumped $100 billion into industry leader OpenAI to bankroll the building of more data centers. OpenAI then is supposed to use that money to purchase Nvidia chips that will be used in the data center. In other words, Nvidia is subsidizing one of its biggest customers, giving OpenAI money to buy Nvidia chips, artificially inflating and propping up the price as well as actual demand for Nvidia chips. Meta also has a similar $27 billion private debt deal with Nvidia.

By other measures, such as the S&P 500 price to earnings ratio (P/E ratio), today’s stock prices are so inflated that they are even higher than the dot-com bubble’s peak. Like an investment casino, a huge amount of money has poured into the AI sector in a very short period of time, to the point where even the CEO of Google, Sundar Pichai, says there are “irrational elements” in the investment patterns right now. Pichai says if the market crashes the damage will be widespread; even highly capitalized Google will not be immune.

Environmental impact, massive energy consumption

Another increasing concern with the rapid construction of data centers is the environmental impact. Inside a data center, thousands of servers run continuously, supported by cooling infrastructure and backup power systems, which use an enormous amount of electricity. This is driving up prices for everyday consumers. Bloomberg reports that, in recent years, wholesale electricity costs have gone up by as much as 257% in areas near data centers. Market reports show that in August 2025, there were more than 1100 data centers across the US, with almost 400 new centers being built. Construction Review reports that there are six mammoth data centers currently under construction that need to be fed by over one gigawatt (GW) of power—an amount sufficient to power 750,000 homes.

Goldman Sachs has estimated that building the necessary energy infrastructure for AI data centers will require $1.4 trillion in investment by 2030. But as the Wall Street Journal has reported, “If the AI hype is overblown or the tech industry doesn’t ultimately need as much electricity as projected, other customers would get stuck with the infrastructure costs.”

Whether the rapid pace of AI investment results in a financial bubble or a transformative boom – or a bit of both – will not be known for several years. In the dot-com crash from 2000-2002, the internet was a promising new technology but telecom companies over-invested in transmission facilities for internet traffic. When the dot-com bubble crashed in 2002, technology stocks dropped 80 percent and half a million people lost their jobs as the unemployment rate zoomed to 7% (and 10% in the tech sector). Twenty-three telecom companies went bankrupt, including the collapse of the telecom giant WorldCom, at the time the single largest bankruptcy in US history.

So bubble collapses can have catastrophic and widespread consequences, much like a Category 5 hurricane ripping ashore. Just as the global internet networks got built, despite a worldwide financial collapse, so too will AI get built. There will be winners and losers that will emerge, though at this point it’s not clear who they will be. But guess who is salivating over the prospect of being one of the big winners?

Trump breaks another norm – separation between politics and personal business

The current AI surge is being aided by the Trump White House, which has put its great big thumbs on the scales in a way that feathers the Trump family’s nest. For years, Donald Trump and his sons, Don Jr. and Eric, showed no interest and were even dismissive and critical of AI as well as cryptocurrencies. But in Trump’s mercurial world his opinions can change unexpectedly, and suddenly AI is looking like a good family business opportunity.

One of President Trump’s first actions in his second term was to repeal the Biden administration’s “Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” Trump also ordered a review of another Biden presidential directive, known as a National Security Memo, governing national security use of AI. Days later, Trump issued his own AI executive order that directed federal agencies to “integrate modern technology” into hiring and other purposes. Many fear that order will result in unfair AI uses arising from bias in the algorithms that will be deployed throughout the federal government. The inherent biases, which is based on the training data used that reflects societal prejudices, has already led to discriminatory outcomes in hiring, promotions and other workplace decisions, as well as who gets a loan, who goes to jail, and other sensitive decisions.

So why the sudden interest and focus by Trump and his sons on AI? Besides wanting to wield it for partisan political advantage, the Trump family has discovered that “there is gold in them thar hills.” They have figured out how to make a lot of money -- billions of dollars -- with AI investments, and cryptocurrencies too. According to Forbes, the Trump family’s investment in AI infrastructure and crypto signifies a broader shift in the family business strategy, moving beyond traditional ventures like real estate and hotels to embrace these new technology areas.

A mere weeks after Trump loosened the Biden administration’s regulations, Don Jr. and Eric Trump invested in a new company, American Data Centers Inc., and later a second, American Bitcoin Corp, which aim to build high-performance computing infrastructure to support AI, cloud computing, and cryptocurrency mining. This investment positions the Trump family to profit from government-backed growth for targeted AI companies, including data center expansion. CBS reported that the Trump family’s net worth initially increased by $2.9 billion in 2025 thanks to its various investments, which now reportedly represent nearly 40% of Trump’s personal net worth.

Led initially by Tesla CEO Elon Musk’s DOGE, the toxic Silicon Valley mindset of “move fast and break things” and “do it now and apologize later” has infected the Trump White House. Trump is overturning 50 years of Republican orthodoxy with actions such as the White House demanding a 10-15% equity stake from AI infrastructure companies like Intel and NVIDIA as the price for receiving government investment subsidies from, ironically, the Biden administration’s CHIPS Act (which Trump previously had criticized). In effect partially nationalizing the economy, Trump’s goal is clear: push the accelerator on anything that can augment breakneck AI development and deployment. And that he and his cronies can invest in and turn a princely profit.

With the hands-off climate around AI, as well as crypto and Silicon Valley companies in general, and with the president and his family having such an enormous financial stake in AI’s widespread deployment, AI will continue to expand rapidly. No one expects any significant regulation of these industries by the Trump administration. Businesses that align with White House policy, like those backed by Trump’s sons, will benefit from favoritism in procuring future government contracts related to AI and data centers development. With unregulated crypto and other AI investments being so volatile, it was not surprising when the Trump sons lost a lot of their initial investment. American Bitcoin stock has plummeted over 80% from its October 2025 peak, and other investments are struggling.

But with Daddy Trump controlling the federal purse strings, would a federal bailout be far behind if the Trump family investments went belly up?

Steven Hill @StevenHill1776 bsky.social @StevenHill1776