Powell says that unlike the dot-com boom, AI spending isn’t a bubble: « I won’t go into specific names, but they actually have revenue »

« I’m not going to get into specific names, » Powell told reporters after the Fed’s policy meeting, « but they actually have income. »

« These companies … actually have business models and profits and things like that. So it’s really different » than the dot-com bubble, he added.

The comments mark Powell’s most direct acknowledgment yet that artificial intelligence is a business structure worth hundreds of billions of dollars. data center and semiconductor investments– has become the real engine of US growth.

A productivity game, not an interest rate-sensitive game

Powell emphasized that the explosive growth in AI consumption is not due to monetary policy or cheap money.

« I don’t think interest rates are an important part of the AI ​​story or the data center story, » he said. « It’s based on longer-term estimates that this is an area that will see a lot of investment, and that will increase productivity. »

That note counters one market narrative that says loosening economic conditions may be fueling an asset bubble in tech. Instead, Powell suggested that building AI is more structural: a bet on the long-term transformation of work. From Nvidia around getting half a trillion dollars in revenue Thu Microsoft and Alphabet’s several hundred billion dollars capital expenditure plans, the scale is unprecedented. But according to Powell, it’s also justified.

Goldman Sachs agrees. In a research note titled « The consumption boom of artificial intelligence is not too big » US Chief Economist Joseph Briggs argued that « projected levels of investment are sustainable, although the ultimate AI winners are less clear ».

Briggs and his team estimate that the productivity unlocked by AI could be worth $8 trillion to the US economy today, and possibly as much as $19 trillion in high-end scenarios.

« We are not concerned about the total amount of AI investment, » the Goldman team wrote. « AI investment is a smaller share of US GDP today (<1%) than in previous major tech cycles (2%-5%)." In other words, there's still plenty of room to run.

Powell’s view echoes this view: while the AI ​​race may bubble up from time to time, it will be funded primarily by corporate cash flow rather than speculative debt.

Real economic impact

Powell pointed out that the investment wave is visible in the real economy. « It’s the investment we’re getting in equipment and all those things that go into creating data centers and powering AI, » he said. « It is clearly one of the biggest sources of economic growth. »

These remarks are in line with private sector assessments. JPMorgan economists have predicted AI-related infrastructure spending could add as much as 0.2 percentage points to U.S. GDP growth over the next year, about the same amount annually as shale drilling achieved at its peak.

The boom is already increased the demand for industrial electricity record levels and forced utilities to accelerate network expansion and face the reality of a network that is too thin. The AI ​​boom isn’t just reflected on paper, in other words: Powell talks about cranes, concrete and capital goods.

Not without caution

Still, Powell didn’t give AI a free pass. He emphasized that while the current upswing in investment looks healthy, it is too early to call it a permanent productivity revolution.

« I don’t know how those investments will work out, » he said.

Despite all its promise The AI ​​economy is unevenly distributed: capital intensive and concentrated in a handful of companies. Economists warn that productivity gains from AI will take years to filter through to the broader workforce, and that automation could stifle hiring in industries that now drive demand.

Powell admitted the same when he pointed out that many recently termination notices from big companies « We’re talking about artificial intelligence and what it can do. » There’s an irony in that: the same technology that boosts output can also slow down job creation—one of the central bank’s two missions.

Powell said job growth, adjusted for statistical overcounting, is now « pretty close to zero. » Powell says that unlike the dot-com boom, AI spending is not a bubble: « I won’t go into individual names, but they actually have revenue. »