A huge chunk of U.S. GDP growth is being kept alive by AI spending ‘with no guaranteed return,’ Deutsche Bank says

Economic Growth - U.S. GDP grew 4.3% in Q3, significantly surpassing the consensus estimate of 3.2% year-on-year, indicating strong economic performance [1] AI Investment Trends - Analysts express concern that the GDP growth is heavily reliant on AI-related spending, with private fixed investment rising primarily due to this sector, while other investments are declining [2] - Deutsche Bank highlights that without tech-related spending, particularly in AI, the U.S. economy would be close to recession, as other spending has stagnated post-Covid [3] Capital Expenditure in AI - Capital expenditure (capex) in AI is projected to be substantial, with estimates from Bank of America indicating that AI capex from five major tech companies will reach $399 billion this year and exceed $600 billion in subsequent years [4] - The funding for this AI capex is increasingly expected to come from debt, as major tech firms have strong cash flows and balance sheets, allowing them to take on additional debt without negatively impacting their financial health [5] Debt Market Dynamics - The net supply of new debt from AI-related issuers in the USD credit market has surpassed $200 billion in 2025, more than doubling the previous year's total, with 30% of this year's net supply being AI-related [6] - Companies are targeting $1 trillion in incremental revenues over the next five years, with significant contributions expected from cloud services, digital advertising, and AI subscriptions [7]