Quote · Excess Returns
We Asked GMO’s Head of Asset Allocation Why This Bubble is Easy — But Investors Will Get it Wrong
Where this was said
How AI CapEx compares to railroads, electricity and fiber optics
At 28:57 · chapter starts 25:00
Ben Inker benchmarks AI data center spending at ~2.2% of US GDP and argues that every transformational technology has destroyed returns for its builders through the same capital cycle [1] — Ben Inker "Every transformational technology from railroads to fiber optics changed the world but destroyed returns for investors. Competition floods …" 27:44 .
2025 US data center spending is forecast at roughly $700 billion to $1.6 trillion — approximately 2.2% of US GDP — comparable to the fiber optic buildout of the late 1990s.
Every transformational technology from railroads to fiber optics changed the world but destroyed returns for investors. Competition floods in, overcapacity destroys ROI, and the benefits accrue to users — not builders. AI infrastructure is following the exact same script.
Railroads transformed the world by collapsing transportation costs, but running a railroad has never generated amazing returns on investment — a lesson for AI infrastructure builders.
