Financing of Historic AI Buildout Raises Systemic Risks in US, Researcher Says
The buildout would need $10 trillion and could require $3.7 trillion in annual revenue by 2032, a Columbia Business School professor said.
- Columbia Business School professor Stijn Van Nieuwerburgh's Brookings Institution study projects AI infrastructure investment will total $10.3 trillion through 2032, consuming 3.6% of United States gross domestic product annually.
- Van Nieuwerburgh estimates the industry will build 183 gigawatts of new data-center capacity over the next seven years, compared with about 57 gigawatts currently installed. "This is freaking complicated," he said of the financing arrangements.
- The professor warned that complex special purpose vehicles used to fund this expansion create systemic exposure. "This opacity of all these special purpose vehicles is somewhat reminiscent of what happened in the subprime mortgage crisis," Van Nieuwerburgh said.
- Achieving projected returns requires the AI industry to earn about $3.7 trillion in annual revenue by 2032. Combined revenues of OpenAI and Anthropic currently total around $100 billion, requiring roughly 80% annual growth.
- Federal Reserve officials are monitoring whether this construction boom exacerbates inflation, while some localities express reluctance to host facilities due to resource strains. The study warns of "MEANINGFUL DOWNSIDE RISK" if demand expectations are revised.
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For investments to pay off, AI companies will need to achieve revenues of $3.7 trillion per year by 2032 The post “Remember the 2009 crisis” – Astronomical investments in AI pose a systemic risk to the economy appeared first on in.gr.
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Financing of historic AI buildout raises systemic risks in US, researcher says
WASHINGTON, Sept 24 : The artificial intelligence buildout is on track to require a larger share of US output than the rollout of electricity, railroads, interstate highways or the internet, with an increasingly complicated financial structure that poses potentially systemic risks, according to a new study.Wh
The Biggest Economic Bet in U.S. History
“The AI build-out is on track to become the biggest economic bet in U.S. history, dwarfing the investments made to fund other huge U.S. infrastructure projects such as the railroads, the highway system and the plumbing for the internet,” the Wall Street Journal reports. “Total investment in data centers and related artificial-intelligence infrastructure is projected […]
The scale of investments in artificial intelligence will be unprecedented in the United States, according to a new report. They are mostly risky.
In a recent study, the renowned economist Stijn van Nieuwerburgh from Columbia Business School has investigated the financing of the AI expansion. He estimates that a 200 MW data center for AI training costs $ 8.2 billion. For the expansion to 183 GW planned by 2032, an estimated 10.3 billion will be spent between 2025 and 2032.
U.S. spending on the construction of AI data centers is huge. However, there were similar things in earlier boom phases. Nevertheless, the level is unprecedented, according to a study.
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