Major technology companies are set to invest more than $1 trillion in artificial intelligence infrastructure in 2027, according to a UBS report. The bank said demand for computing capacity is already outrunning supply, prompting higher spending plans that are also supporting US economic growth.

UBS estimates AI-related capital expenditure by these firms will surpass $600 billion in 2026 before crossing the $1 trillion mark the following year. “Demand has exceeded capacity ahead of schedule,” the report stated, noting that companies have lifted their investment targets as needs for computing power keep rising. Spending is expected to continue increasing over the next year, though the rate of growth may peak in 2027 as higher outlays strain cash flows and raise financing requirements.

The investment wave has already aided the US economy. UBS calculated that AI infrastructure spending added about 0.75 percentage points to GDP growth in the first half of 2026. Gains in equity prices of AI-linked companies also lifted household wealth and consumer spending.

Evidence of broader effects remains limited. The report found little clear sign that AI has yet raised overall productivity or triggered large-scale job losses. Its estimated impact on the unemployment rate is around 0.2 percentage points or less. Employment in some high-technology areas, such as software and computer systems design, fell 1.4 percent year-on-year, while construction jobs tied to data centre building rose nearly 3 percent.

Financing pressures are emerging. Cash flows at major technology firms have weakened and appetite for their bond issues has softened. Investors expect free cash flow to turn positive again in 2028 if the companies can generate enough revenue from AI services. AI demand is currently pushing up prices for software, digital goods and electricity, though future productivity gains could ease inflation. UBS said the investment cycle’s path will hinge on whether computing demand stays ahead of supply and whether firms convert spending into lasting revenue growth.

(ET)