Is the economy already benefitting from an AI boom?

Investing.com -- Investment in computer hardware and software has surged in the first half of 2025, but the broader economic benefits of artificial intelligence remain uncertain.

Real GDP growth slowed to an average annualized pace of 1.2% in the same period, yet business investment expanded at a 6.1% rate.

This was driven largely by an 86.4% annualized jump in computer equipment spending and an 18% rise in software investment, according to Capital Economics.

While these figures suggest the early stages of an AI-related boost, the hardware gains are not translating directly into productivity improvements.

Nearly all of the hardware is imported, with imports of computers and peripherals climbing nearly 60% over the past year.

By contrast, domestic computer and electronic product manufacturing contributed just 0.03% to first-quarter GDP growth, while software added 0.26%.

The brokerage also noted that some of the hardware surge could be the result of companies moving to buy ahead of potential tariffs, rather than purely from AI demand.

Productivity data shows a mixed picture. Labour productivity expanded at a 2.4% annualized pace in the second quarter, partly due to slower employment growth. Over the past year, however, productivity growth slowed to 1.2%.

Historically, the connection between capital investment and productivity gains has been weak. In the late 1990s and early 2000s, multifactor productivity gains not directly linked to capital or labor, played the largest role in the productivity boom.

Capital Economics noted that, unlike that earlier period, current software investment growth remains below average at close to 10%, and research and development spending has been stagnant over the past year.

For AI to deliver significant productivity gains, the brokerage said, a much larger increase in both software and R&D investment may be necessary.