Market And Economy

Chrome robots terminating liquid gold?

DSP

Aug 29, 2025 3 mins

Summary

Oil once ruled the world. Now, AI is the new liquid gold. Billions are pouring in at breakneck speed, rivaling history’s wildest booms. But is this progress? Or a bubble waiting to burst? Discover what today’s AI capex frenzy means for investors below.

Around ten years ago, the global economy was obsessed with oil.

In 2014, capital expenditure (capex) on oil and gas infrastructure was nearly 1% of the world's GDP. In the US alone, oil and gas extraction reached 1.5% of GDP: a spending frenzy that rivaled the dot-com boom.

Today, that obsession has shifted dramatically to AI. We're witnessing an unprecedented wave of investment in that sector, with tech giants at the forefront.

This AI-related capex already exceeds the peak of the dot-com telecom bubble. At around 1.2% of GDP**, this spending is now equivalent to 20% of the 19th-century railroad investment frenzy, one of the most extreme buildouts in history. And the pace of this new wave is breathtaking.

Consider this: Nvidia, a key player in this buildout, has seen its revenue skyrocket fivefold in just three years to $150 billion1. Such growth represents a staggering 70% CAGR.

Nvidia alone now accounts for 5% of all US information-processing equipment and IP investment1. This is an incredible achievement: even the likes of Cisco couldn’t boast of something so impressive at the peak of the dot-com boom in 2000.

This is also a clear sign that this is more than just hype; instead, it's a massive, concentrated reallocation of capital.

While the long-term impacts of AI are still unfolding, this capex wave is unique. Unlike previous booms driven by broad-based economic returns, this boom is fueled by a handful of ultra-profitable firms.

And thus, the scale and concentration of this capex warrant a healthy dose of caution.

Why? Because even in the most promising technological revolutions, the biggest risks often emerge from the highest valuations.

For more actionable insights backed by data and analyses, we invite you to read the latest edition of Netra in its entirety.

** Source: Bloomberg, Paul Kedrosky, Jens Nordvig, DSP. Data as of July 2025.

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