The tech industry’s insatiable hunger for artificial intelligence is no longer just a Silicon Valley phenomenon—it has become a gravitational force pulling resources away from the broader American economy. According to a recent report by The Washington Post, five of the world’s leading technology giants are on a spending spree so massive it rivals the U.S. military’s budget, triggering a “domino effect” of shortages and price hikes that extend far beyond the digital world.
Amazon, Google, Microsoft, Meta, and Oracle are collectively on track to spend roughly $700 billion this year on the infrastructure required to power AI. This staggering figure is nearly double their 2025 outlays. To put the scale in perspective, the Post notes that this investment is equal to three-quarters of the U.S. military’s recent annual budget. While these companies argue the investment is necessary to capture future revenue, the sheer volume of capital being diverted into data centers and specialized chips is beginning to choke other sectors.
The Great Labor and Material Drain
One of the most immediate casualties of the AI boom is the physical construction industry. As tech giants race to build “stuffed” data centers across the country, they are monopolizing the workforce and raw materials needed for other essential projects.
The Washington Post highlights that electricians, in particular, are becoming increasingly difficult to find. The complexity of wiring a modern AI hub—which requires massive amounts of power and cooling—means that skilled tradespeople are being lured away by the high wages tech firms can offer. Consequently, local construction projects, from office buildings to affordable housing, are being placed on hold. Associated Builders and Contractors estimates that the construction industry will be short nearly half a million workers next year, a deficit exacerbated by the AI-driven demand for specialized labor.
The shortage isn’t limited to people; it extends to the very components that make our daily technology function. To power AI calculations, companies need “gobs” of memory chips. This concentrated demand has driven up the prices of chips used in smartphones and laptops, meaning consumers may see higher prices for personal electronics for years to come.
A Gamble of Historic Proportions
The financial scale of this “AI arms race” has even seasoned investors worried. Roger McNamee, a veteran technology investor, told the Post that the amount invested in AI since mid-2022 likely exceeds all prior investments in the tech industry’s history. “That alone should give everyone pause,” McNamee warned.
The risk lies in the “mammoth” up-front costs. Analysts at JPMorgan have calculated that the tech industry needs to generate an additional $650 billion in annual revenue—roughly three times Nvidia’s annual revenue—to earn a reasonable return on this investment. If AI does not fundamentally reshape life and work in a way that “uncorks massive new profits,” the industry could be headed for a correction that would reverberate through the global stock market.
Stifling Innovation Beyond the “Phenoms”
Perhaps most concerning is the “class divide” forming within Silicon Valley itself. The Post reports that the concentration of capital is creating a winner-take-all environment where a tiny number of “AI superstar” startups receive the lion’s share of funding, leaving other promising innovations starved of cash.
Darrell West, a senior fellow at the Brookings Institution, told the Post that this tunnel vision threatens “American dynamism.” By soaking up so much attention, talent, and capital, the AI boom may be inadvertently killing off the next generation of breakthroughs in fields like biotech, renewable energy, and transportation that don’t have an AI “phenom” at the helm.
The Broader Economic Toll
Even as the stock market hits record highs—with the Dow recently closing above 50,000—the underlying economy is showing signs of strain from this lopsided growth. While tech companies see higher revenues from businesses eager to adopt AI, the “supply-side” of the economy is struggling to keep up.
The Post notes that spending on data center construction rose 32 percent in 2025 alone, while spending on other types of commercial real estate has remained flat or declined. In a world of finite resources, the tech industry’s gains are increasingly the rest of the country’s losses. As the AI giants continue to splurge on their digital cathedrals, the rest of the economy is left to deal with the higher costs, fewer workers, and the looming question of whether this $700 billion bet will ever actually pay off for the average consumer.
Source: The Washington Post
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