US investment shifts from housing to AI data centers, Fed economist says

September 22, 2026 at 06:30 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Federal Reserve Bank of San Francisco Vice President Adam Shapiro said US investment is shifting away from residential construction toward computers and data centers as the AI boom accelerates. Inflation-adjusted spending on information-processing equipment reached $752 billion in the second quarter, exceeding residential investment of $748 billion. The shift comes even as data-center capital expenditure is projected to rise from 1.4% of GDP in 2025 to 3.1% in 2027.

Key Facts

Real private residential fixed investment was $748 billion in Q2 2026, while information-processing equipment reached $752 billion, according to Bureau of Economic Analysis data.
Data-center capital expenditure is projected to rise from 1.4% of GDP in 2025 to 3.1% in 2027, an increase of roughly 0.85 percentage points per year.
Hyperscaler capital expenditures are expected to reach about $916 billion over the next 12 months and nearly $1.2 trillion the following year.
S&P Global estimated capital expenditures from Alphabet, Amazon, Microsoft, Meta, Oracle, and SpaceX will exceed $1.3 trillion in 2027.
S&P Global Ratings reported all six hyperscalers are expected to generate negative free operating cash flow in 2026 and 2027, with recovery not projected until 2029.

Investment Shift

Federal Reserve Bank of San Francisco Vice President Adam Shapiro said in a Friday LinkedIn post that investment is shifting away from residential investment and toward computers. Inflation-adjusted spending on information-processing equipment, which includes data centers and computer hardware, now exceeds residential investment. Bureau of Economic Analysis data released in August shows real private residential fixed investment at $748 billion in the second quarter, while information-processing equipment reached $752 billion. Shapiro noted that residential investment is more sensitive to borrowing costs, while AI investment has been less sensitive to interest rates.

AI Capex Acceleration

Data-center capex is projected to rise from 1.4% of GDP in 2025 to 3.1% in 2027, an increase of roughly 0.85 percentage points a year. Torsten Slok, Partner and Chief Economist at Apollo Global Management, said the AI cycle is building at close to twice the pace of the housing boom at its fastest. Hyperscaler capital expenditures are expected to reach about $916 billion over the next 12 months and nearly $1.2 trillion the following year. S&P Global estimated capital expenditures from Alphabet Inc., Amazon.com Inc., Microsoft Corp., Meta Platforms, Inc., Oracle Corp. and Space Exploration Technologies Corp. will exceed $1.3 trillion in 2027. S&P Global Ratings reported that all six hyperscalers are expected to generate negative free operating cash flow in 2026 and 2027, with recovery not projected until 2029.