How Much Did AI Spending Contribute To Revised Fourth-Quarter 2025 GDP?

Over 100 percent of fourth quarter GDP was AI related. What happened?

Private Nonresidential Fixed Investment 2025 Q4 2nd Estimate, IP Equipment, Software, R&D

The BEA reports Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in the fourth quarter of 2025 down from the advance estimate of 1.4 percent.

AI-Related Spending Change in Billions

IP Equipment: 51.5 up from initial estimate of 50.4
Software: 8.1 down from initial estimate of 15.0
IP R&D: 14.5 down from initial estimate of 15.6

Net change -6.9 billion all in software as equipment and R&D offset.

Real Private Fixed Investment

Private Fixed Investment 2025 Q4 Second Estimate

Real Private Fixed Investment Spending Change in Billions

Private Fixed Investment: 17.9 down from 27.9
Private Nonresidential Fixed Investment: 28.5 down from 33.8
Private Residential Fixed Investment: -1.0 up from -2.9
IP Equipment, IP Software, R&D: 74.1 down from 81.1

Percentage Point Contributions to GDP

Percentage point contribution to GDP

Nonresidential Contribution to GDP

2025 Q1: 1.24 Percentage Points
2025 Q2: 0.98 Percentage Points
2025 Q3: 0.44 Percentage Points
2025 Q4: 0.31 Percentage Points

Nonresidential AI Contribution to GDP

2025 Q1: 1.24 * 99.6 / 81.0 = 1.52 Percentage Points
2025 Q2: 0.98 * 79.7 / 63.9 = 1.22 Percentage Points
2025 Q3: 0.44 * 34.6 / 28.5 = 0.53 Percentage Points
2025 Q4: 0.31 * 74.1 / 28.5 = 0.81 Percentage Points Down from 1.22 in Advance Estimate

The 2025 AI total contribution is 1.52 + 1.22 + 0.53 + 0.81 = 4.08 percentage points.

For the fourth quarter, AI contributed 0.81 percentage points of 0.70 percent. That’s more than the total.

IP equipment, not IP software or R&D, was the big boost. See lead chart.

However, the government shutdown subtracted 1.03 from GDP. Factor that out and the AI contribution was 0.81 PP of 1.73 percent.

Ignoring the government shutdown impact, AI contributed about half (46.8 percent), of the fourth-quarter gain.

For further discussion of huge negative revisions, very little of which was government spending, please see Fourth-Quarter GDP Estimate Cut in Half. What Happened?

Key Revisions