AI investments drive 67% of US growth despite being just 6% of GDP

US economic growth has become dangerously dependent on artificial intelligence investments, with AI contributing two-thirds of the country’s 1.6 percent GDP growth this year despite representing only 6 percent of the total economy. This concentration creates significant risks for retirement funds and the broader financial system, as any slowdown in AI spending could trigger a market crash that would devastate 401(k) accounts and other retirement savings vehicles.

The big picture: America’s economic engine has flipped upside down, with a tiny slice of AI investment now pulling the entire $28 trillion economy forward instead of the usual driver—consumer spending, which typically accounts for 70 percent of GDP.

Why this matters: The “Magnificent Seven” tech companies—Meta, Apple, Google, Amazon, Tesla, Microsoft, and Nvidia—now represent about 36 percent of the S&P 500’s total market cap, creating unprecedented concentration risk for millions of Americans’ retirement accounts.

What the numbers reveal: Computer and software investments, despite being just 6 percent of the economy, are generating outsized influence on national economic performance.

• US GDP growth is on pace to hit 2.8 percent this year, matching 2024’s performance.
• Two-thirds of current growth stems directly from AI-related investments.
• Consumer spending, traditionally the economy’s primary engine, has been eclipsed by the AI boom.

The retirement fund risk: Public markets’ heavy weighting toward tech companies means any AI bubble burst would have “powerful influence” on 401(k) accounts and other retirement savings.

• Personal finance experts warned in April that “few would escape the pain” of an eventual AI crash.
• IRAs and other retirement vehicles would face similar exposure due to tech stock concentration.
• The S&P 500 could lose as much as 30 percent of its expected revenue growth if AI spending slows.

What market strategists are saying: Industry experts express concern about this unusual economic dynamic.

• “What drives the economy quarter by quarter is almost always consumer spending,” Callie Cox, a market strategist, told the Washington Post.
• “We’re now locked into a particular version of the market and the future where all roads lead to big tech,” said Amba Kak, co-executive director of the AI Now Institute, a tech policy think tank.
• Strategic advisor Dion Hinchcliffe warned Forbes that “the danger isn’t just the Mag 7 falling, it’s that the rest of the index is simply too weak to pick up the slack when they do.”

Potential fallout scenarios: If AI investment slows or stops, the economic consequences would ripple across multiple sectors.

• Large tech firms would likely survive, but AI startups dependent on venture capital would “crumble into dust.”
• Energy and construction markets would suffer as data center development halts.
• Wall Street would face devastating losses with the S&P 500 particularly vulnerable.