Former White House AI and crypto czar David Sachs recently said that AI has become a core driver of economic growth in the United States. His opinion is that halting the progress of AI is tantamount to bringing the U.S. economy to a screeching halt.
This Sunday, David Sachs posted on X to give his thoughts on a recent report published by Morgan Stanley. This report focuses on investment forecasts for the top five US hyperscalers (Amazon, Alphabet, Meta, Microsoft, and Oracle) this year and next.
The total capital expenditure forecast has been raised from $805 billion in 2026 to $1.1 trillion in 2027. For reference, the projected spending of $805 billion in 2026 is approximately double the same spending from the previous year.
While this unprecedented level of spending may seem ridiculous to the average person, Sachs sees it differently. To him, this is an indicator that halting or slowing progress in AI investment and development will harm the U.S. economy.
Despite the polls Sachs consulted showing AI being unpopular with the public, he believes the technology’s potential for economic growth is of far greater importance.
Why is investing in AI so important to U.S. economic growth?
The new Morgan Stanley report shows that AI capital spending will add 2.5% to GDP growth this year and more than 3% by 2027, according to David Sachs. However, it is important to note that this report only covers the top five hyperscalers. It does not include all companies currently investing in AI or the large number of AI startups. This means that the economic impact of AI growth and investment could have a much larger impact on GDP growth than these numbers indicate.
The rationale behind this idea is simply that capital investment refers only to investment in the infrastructure (i.e., data centers) required for the AI program to operate. It does not take into account the value created to the economy through increased productivity through the use of AI programs, systems, and applications.
In a post on X, Sachs said, “The ROI on capital investment is likely to dwarf the capital investment itself, which is why investment continues to increase.” Furthering his view, Sachs continued, “in the first quarter” (2026), “AI already accounted for 75% of GDP growth.”
The bet behind the AI boom
Many proponents of the AI boom understandably share the same perspective as Sachs. There is certainly great potential for widespread adoption of AI to significantly increase productivity growth in the U.S. economy in ways never seen before.
At the same time, just because this is possible doesn’t mean it will work as expected when implemented. Many critics of the recent AI boom liken it to the dot-com bubble. At the time, huge expenditures were made on infrastructure to support the then-new technologies, much of which did not result in the promised benefits.
Still, there are major concerns that big tech companies are building excess capacity in anticipation of demand that hasn’t yet materialized. The points that should be noted because of AI are: can Improving productivity does not mean that companies will integrate productivity quickly or that employees will adapt quickly.
Additionally, AI data centers consume large amounts of energy, further limiting the speed at which expected ROI can be realized. Finally, much of the current AI investment is concentrated in the big five tech companies, which raises important questions. So, will the economic benefits of this technology be widely distributed, or will it remain in the hands of the few who control it? Unfortunately, this can only be answered over time.
