Governments must exercise caution in these times of AI overinvestment

Within the sector, however, there are signs that reflect not just a classic boom-and-bust cycle building up, but also that significant systemic risks are being ignored

A significant proportion of investment in the Western world is currently going into the supply chain for providers of artificial intelligence (AI). In fact, without this capital expenditure, growth might well be minimal in many key geographies. According to Jason Furman, former chair of the United States’ Council of Economic Advisors, the “investment in information processing equipment and software” category of the United States’ national income accounts has been responsible for over 90 per cent of that economy’s growth in the first half of 2025. This is the statistical reflection of a real-world phenomenon: The vast diversion of