Tech Brew Ride Home (BNS) Could AI Spending Blow Up The Economy? With Paul Kedrosky
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Aug 9, 2025 Joining the conversation is Paul Kedrosky, a seed stage investor known for his infectious insights into economics and tech. He delves into the explosive growth of AI capital expenditures and their surprising role in boosting GDP, revealing how major tech giants influence economic performance. Kedrosky discusses the complexities of data center investments and the potential pitfalls of rapid AI spending. He cautions against over-optimism in the tech sector while emphasizing AI's critical applications in fields like medicine, offering a thought-provoking look at the future of technology.
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AI CapEx Is Material To GDP Growth
- AI capital spending by big tech added a sizable chunk to recent GDP growth.
- Paul Kedrosky estimates AI CapEx could account for ~0.7 percentage points of quarterly growth.
CapEx Multiplies Through The Economy
- AI CapEx spending circulates through wages, suppliers, and debt to amplify GDP impact.
- Applying a 2x multiplier could make AI CapEx responsible for ~1.5 percentage points of quarter growth.
GPU Installs Have A Short Useful Life
- GPU installations in data centers have an average useful life of about three years.
- Unlike rail or fiber, these assets require frequent replacement, making the capex effectively perishable.
