Don’t let AI critics tell you it’s good for nothing: the amount of money being spent on AI infrastructure is so enormous that it’s literally propping up the US economy.
The drawback, of course, is that if the AI industry fails, it could drag the rest of the economy down with it.
In 2024, the S&P 500 grew by an incredible 24 percent — what the investment firm Charles Schwab understatedly called a “very good year.” Since 2023, nearly half the growth was clustered in just a handful of tech stocks known as the “magnificent seven”: Meta, Amazon, Google, Microsoft, Nvidia, Tesla, and Apple.
And as the Atlantic recently noted, the companies most heavily involved in the AI boom have yet to see that success manifest in anywhere except the stock market.
Though Meta, Amazon, Microsoft, Google, and Tesla are expected to have spent some $560 billion on AI development by the beginning of next year, their collective revenue from AI comes in at a paltry $35 billion. In the first half of 2025, the Atlantic notes, business spending on AI added more to GDP growth in the United States than all consumer spending combined.
This revenue gap is the key crisis facing the tech industry — and the broader economy — in their quest to build an AI future. Thanks to roundly horrible performance in actual workplace environments, revenue remains illusive for the vast majority of AI deployments.
Still, managers across industries are being pressured to show financial gains from the tech, even when the software isn’t delivering. That’s causing companies to do some creative accounting with their staff, laying off workers or slowing down hiring to inflate AI’s numbers.
As the Atlantic highlights, this is leading to the very real possibility of a rupture forming in the broader economy, where companies induce rounds of layoffs to satisfy executives, without anything to show for it in the bottom line.
In other words, we’re barreling toward a future where unemployment could rise while productivity takes a nosedive — dramatically slowing the economy as a result.
That scenario isn’t exactly unprecedented. The computer boom of the 1980s took a similar turn, when early email software prompted executives to lay off secretaries and typists, resulting in specialized white collar workers actually spending more time sending emails than on their typical roles.
“Email was one of those technologies that made us feel more productive but actually did the opposite,” computer scientist Cal Newport told the Atlantic. “I worry we may be headed down the same path with AI.”
There’s just one crucial difference: email isn’t propping up half the stock market.
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