AI is booming-and the bust could be even bigger

"That $5 billion would be roughly the equivalent of $50 billion today, but even that princely sum is dwarfed by the $364 billion that tech giants are expected to invest in artificial intelligence this year. And the spending won't stop there. McKinsey projects that building AI data centers alone could demand $5.2 trillion by 2030. Today, the AI investment boom is probably the single biggest factor propping up the US economy."

"In terms of economic impact, the closest comparison to the AI boom was the railroads in the 19th century. Then, like now, there was a revolutionary technology with unprecedented potential for impact. The railroads promised to connect production to markets like never before in human history. Another striking parallel was government support and subsidy for investment. The Pacific Railroad Acts of 1862 and 1864 authorized vast land grants and the issue of government bonds to finance the construction of railroad infrastructure."

IBM's $5 billion System/360 gamble transformed computing and set a decades-long industry dominance benchmark. Current AI investment dwarfs that sum, with tech giants spending roughly $364 billion this year and McKinsey estimating $5.2 trillion for AI data centers by 2030. The AI boom is a major driver of the U.S. economy today. Historical parallels to the 19th-century railroad expansion show similar patterns: revolutionary technology, large-scale government support, guaranteed profits for private investors, and risks borne by the public. Railroad monopolies eventually stifled competition and harmed smaller producers, driven by greed and overinvestment.

Read at Fast Company