U.S. Spending on Computing Equipment Now Tops Housing Investment as AI Buildout Grows

Inflation-adjusted U.S. spending on information processing equipment, a category that includes data center and computer hardware, now exceeds residential investment. “We’re seeing a pivotal shift in the US economy: investment is shifting away from residential investment and towards computers,” Adam Shapiro, a vice president at the San Francisco Fed, wrote on LinkedIn, as Fortune reported.

Bureau of Economic Analysis data show real private residential fixed investment at $748 billion in the second quarter, down 18% from an early 2021 peak, while spending on information processing equipment rose 51% over the same span to $752 billion. Shapiro noted that housing is more sensitive to borrowing costs, while AI investment has been less affected by rates even as hyperscalers issue more debt.

S&P Global estimated that capital spending by Alphabet, Amazon, Microsoft, Meta, Oracle and SpaceX will exceed $1.3 trillion in 2027, up from a projected $870 billion in 2026 and $470 billion in 2025, Fortune said. The ratings firm warned that capex is growing faster than revenue and could lead to overcapacity if demand falls short, and it sees 2028 as an inflection point when revenue accelerates and capex flattens.

Construction tells the same story

Private data center construction spending topped $75 billion at a seasonally adjusted annual rate in July, about 57% higher than a year earlier, according to Census Bureau figures cited by Crypto Briefing. Overall private construction spending was $2.16 trillion, down 0.5% from June and 3.8% below a year earlier, and data centers accounted for essentially all recent growth in nonresidential construction. Housing starts fell 2.6% in August to an annualized 1.275 million, Fortune noted.

Demand for capacity keeps outrunning supply. Net absorption of U.S. data center capacity rose from 6.4 gigawatts in 2023 to 16.9 gigawatts in 2025, and first-quarter 2026 leasing hit a record 9.5 gigawatts, according to AFIRE. About 25.7 gigawatts was under construction in the first quarter, roughly 93% of it pre-leased, and national vacancy fell to 1.1%.

Faster than the housing boom

Apollo chief economist Torsten Slok put the buildout in historical terms. Consensus expects hyperscaler capex to run at roughly 3% of GDP each year from 2027 to 2029, up from 0.3% in 2019 and 1.4% in 2025, Apollo wrote. That’s more than twice the late-1990s telecom peak of 1.2% of GDP, but still less than half the housing boom’s 6.6% peak in 2005.

The speed is what stands out. Data center capex is set to add about 0.85 percentage points of GDP a year from 2025 to 2027, compared with 0.5 points a year during housing’s fastest phase from 2002 to 2005. Slok also flagged the risk on the other side: “A cycle that builds at 0.85 percentage points a year can unwind at a similar pace, and that, rather than the buildout itself, is the macro risk if AI demand disappoints.”