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Council: AI capital spending now a major GDP driver, rivals defense budgets
Summary
The council highlighted large AI-related capital investments by major tech firms that are materially supporting GDP growth; a Morgan Stanley study was cited showing private AI spending could rival Department of Defense capital expenditures in 2026.
Dave said that investment in AI and related data-center buildout has become a growth driver for GDP and cited Morgan Stanley work showing large projected private spending. "This study is forecasting that spending will rival the entire spending by defense department," he said while pointing at the chart comparing private AI-related capital expenditures with Department of Defense spending.
He identified the five largest investors (Alphabet, Amazon, Meta, Microsoft and Oracle) and said the surge in computing equipment and data-center construction is adding 0.25 to 0.5 percentage points to GDP growth each quarter. Council members asked clarifying questions during the Q&A about whether the figures are U.S.-level totals; Dave confirmed the slide compares national totals for the companies, not Washington-specific spending.
