US

US-EU Business Investment Gap Expands Thanks to AI

U.S. business investment is reportedly on pace to increase three times faster than in Europe.

That’s according to a report Monday (Aug. 24) by the Financial Times (FT), citing a forecast from Oxford Economics showing an artificial intelligence (AI)-fueled gap widening between the two regions.

U.S. corporate spending on new equipment and facilities is expected to jump 40% by the end of next year compared to 2021, the forecasts said, thanks to increasing investments in AI equipment. By contrast, spending in Europe is projected to increase by 12% over the same time frame.

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The FT said these findings spotlight the difficulties facing Europe as it works to keep pace with America’s boom in tech spending. Even before ChatGPT came on the scene in 2022, Europe was trailing the U.S. in terms of tech investment, the report added.

At the same time, the report said, these figures raise questions for the U.S. and its AI spending at a time when organizations like the Bank for International Settlements are warning of the increasing risk of an “investment bust” around artificial intelligence.

Google, Meta, Microsoft and Amazon are on pace to invest more than $725 billion just this year on their AI infrastructure efforts.

In related news, PYMNTS wrote last week about the growing public opposition to AI data centers, a shift that has cemented these projects as a “potent political and regulatory issue.”

According to a recent Wall Street Journal (WSJ) report, research from Gallup found that 71% of Americans would be against the construction of a data center in their community. That report also cited figures from Data Center Watch showing that the first quarter of this year saw a record number of blocked or delayed projects.

The backlash is also altering the industry’s political message. In the face of emphasis on AI’s disruptive potential, executives are painting it as a source of widely-shared economic opportunity. However, University of Michigan professor Ben Green told the WSJ that companies touting themselves as good neighbors are simultaneously fighting moratoriums and regulation.

“That tension will define the next stage of the data center fight. Community opposition is no longer merely delaying individual projects,” PYMNTS wrote. “It is forcing businesses to disclose more, offer tangible benefits and absorb more infrastructure costs, while pushing regulators and politicians toward protections they had been slow to impose.”