BofA Flags AI Boom Risk Ahead of Data Center Vote

BofA warns a sudden AI trade correction could slam the global economy. That warning arrives as 41 data-center ballot measures roll out in ten states. Investors are increasingly concerned about the sustainability of the AI trade, the economists wrote. Data-center construction spending hit a record $84.95 billion in August, up 73 percent year over year. AI-related hardware investment now sits $613 billion above 2022 levels, about 1.9 percent of GDP. Big tech is set to spend roughly $800 billion on capex this year, a 96 percent jump. Analysts forecast $1.2 trillion of capex for next year. Since earnings season began, the S&P 500 fell three percent while the index without AI stocks rose five percent. AI now powers 24.6 percent of U.S. businesses and 28.6 percent expect to adopt it within six months. Layoffs blamed on AI totalled 4,000 in September and 207,000 since May 2023. The economists concluded, "Investors are increasingly concerned about the sustainability of the AI trade."