The expansion of artificial intelligence (AI) infrastructure is accelerating at an unprecedented rate. According to a recent analysis, data-center investment growth is “building at close to twice the pace” of the mid-2000s housing boom. This breakneck speed presents a severe macroeconomic threat if AI demand falters and triggers a sudden market reversal.
Unprecedented Speed and Scale
While the current AI capital expenditure buildout remains less than half the peak size of the housing bubble in total economic share, its sheer velocity is unmatched.
The analysis by Torsten Slok, Partner and Chief Economist at Apollo Global Management, points out that “data-center capex adds 1.7 percentage points in just two years, from 1.4% of GDP in 2025 to 3.1% in 2027, or roughly 0.85 percentage points a year.”
For historical context, the housing market‘s most rapid expansion phase, spanning 2002 to 2005, grew at just 0.5 percentage points annually. The telecom and fiber buildout of the late 1990s expanded at merely 0.15 percentage points a year. Consequently, “the AI cycle is building at close to twice the pace of the housing boom at its fastest.”
Consensus forecasts project hyperscaler capex will sustain a level of approximately 3% of GDP annually from 2027 through 2029. In terms of cumulative change, which directly impacts GDP growth, the data-center expansion represents a massive 2.5 percentage point rise from 0.6% of GDP in 2023 to 3.1% in 2027. According to Slok’s analysis, this would make it the “bigger capex cycle” compared to previous historical booms.
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The True Macroeconomic Risk
Slok argues the primary macroeconomic risk is not in the massive investment itself, but in the potential for a rapid contraction. The analysis draws direct parallels to the 2008 financial crisis, noting that housing’s dramatic unwind from 6.2% of GDP in early 2006 to 3.0% by the end of 2008 “is what made that recession severe.” Conversely, the telecom boom’s smaller reversal produced a relatively mild recession.
“A cycle that builds at 0.85 percentage points a year can unwind at a similar pace, and that, rather than the buildout itself, is the macro risk if AI demand disappoints,” the report warned.
This stark assessment recently garnered attention from prominent investor Michael Burry, who highlighted the “three great charts” on social media.
Torsten Slok at Apollo has three great charts today.
— Cassandra Unchained (@michaeljburry) August 6, 2026
"Data-center capex adds 1.7 percentage points in just two years, from 1.4% of GDP in 2025 to 3.1% in 2027, or roughly 0.85 percentage points a year. Housing's quickest phase, from 5.1% in 2002 to 6.6% in 2005, ran at 0.5… pic.twitter.com/AhM0ljgndw
How Have Markets Performed In 2026?
The S&P 500 index has advanced 12.42% year-to-date. Similarly, the Nasdaq Composite index was up 13.40%, and the Dow Jones gained 11.37%YTD.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq 100, respectively, closed lower on Thursday. The SPY was down by 0.16% at $768.56, while the QQQ declined by 0.37% to $714.65.
Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), closed down 0.85% at $538.19 on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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