AI investment’s outsized economic boost

AI investment's outsized economic boost

By Nationwide Chief Economist Kathy Bostjancic and Nationwide Financial Markets Economist Oren Klachkin

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Investment in artificial intelligence (AI) throughout 2025 has not only driven the equity market's ebullient performance, but it has also offered a significant positive contribution to the year's GDP growth.

According to Nationwide Economics' calculations, business investment in software, IT equipment and structures that consists significantly of artificial intelligence and data centers was responsible for an outsized 30 percent of GDP growth in Q2 2025 and 20 percent of the economy's expansion in Q1. These large contributions are striking but not surprising given that capital expenditures by the hyperscalers (large cloud computing service companies) represented more than 50 percent of their operating cash flow in Q2, an all-time high.

In another sign of widespread enthusiasm, AI stocks are largely responsible for the double-digit, year-to-date return for the S&P 500® Index and equity analysts are broadly very optimistic about the sector going forward. While there has been some volatility most recently, a popular ETF for AI stocks is up a very enthusiastic 30 percent year-to-date.

How this impacts the economic outlook
Investment in artificial intelligence (AI) and data centers today accounts for a significant share of U.S. economic growth, corporate spending plans and equity market performance. While impressive, this also means that the economy's topline growth and the stock market gains are very reliant on the persistence of enthusiasm about this emerging technology. Looking ahead, how large the return on AI investment turns out to be could have profound impacts on productivity growth and the broad economy in 2026.

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