How AI just became the biggest economic bet in U.S. history

Dear Fellow Investor,

Good morning. Happy Monday.

Today I want to talk about a new report from the Brookings Institution that analyzes the AI build-out happening across the country right now.

The report says this build-out is becoming the biggest economic bet in United States history.

Data center spending is now greater than what we spent on canals, railroads, and the power grid — combined.

That's creating a lot of new jobs.

It's creating a lot of new wealth.

But it's also boosting inflation.

How Do You Measure a Build-Out Like This?

Dollars today don't look like dollars from yesteryear.

So economists measure these build-outs as a percentage of GDP — gross domestic product.

I went through the report and pulled the numbers for you.

Here's how the AI build-out stacks up against history:

Canals (1836–1841): 0.66% of GDP.

These let us move goods around the country before railroads existed.

Railroads (1870–1890): 2.2% of GDP.

This was the big post-Civil War build-out that knitted the country together.

Electrification (1905–1925): 0.5% of GDP.

This is when Edison's light bulb and the electric grid transformed

America.

Highways (1956–1973): 1.13% of GDP.

Eisenhower saw how the German Autobahn gave the Nazis a military edge, moving troops and supplies fast.

So he came home and built the Interstate Highway System.

Telecom & Fiber (1996–2003): 1.1% of GDP.

That's the dot-com and fiber-optic boom.

Now Compare That to AI

The report estimates the AI build-out will run from 2025 to 2032.

The cost: 3.63% of GDP.

That's more than three times the highway build-out.

Total investment is projected to hit $10.3 trillion.

That is a staggering number.

What This Means for Jobs

AI is the force behind more than 750,000 U.S. jobs, according to LinkedIn.

That's from 2023 through 2026 so far.

And these are good-paying jobs.

I heard an electrician say young guys are coming into the trade

specifically to pay off their college bills.

The median pay for these build-out jobs is $180,000.

Construction never fully recovered after the Great Recession.

Now it's booming again.

The Flip Side: Inflation

More jobs means more competition for workers.

More competition means rising wages.

Rising wages mean rising inflation.

We're seeing this play out in the bond market.

Last week, the 10-year Treasury yield popped through 5%.

In the old economy — 2022 through mid-2025 — anything above 5%

was a ceiling.

Stocks got hammered whenever we crossed it.

But that regime was built on a weaker economy.

This economy is stronger.

We don't know yet if the old rule still applies.

A New Regime

Everything about this build-out is inflationary.

Micron charges more for memory.

Apple has to charge more for iPhones because components cost more.

We may be exiting the era where the government suppressed interest rates after the 2009 Financial Crisis.

That's good news in some ways.

But we don't want to see an inflation spike.

We're entering a new level of economic growth and a new interest rate

regime.

None of us has been here before — not just in the U.S., but globally.

It's a new experience, and we'll get through it together.

The good news: everything happening now has happened before, in some form.

That's the beauty of the markets.

There’s a lot of prosperity to go around.

Whether you or your kids or grandkids are looking for a new career, or simply looking to passively profit from the AI buildout.

I can help with the latter.

When I recommended Rocket Lab at $3 and change, a lot of people didn’t take it seriously. After it had run up to $151 less than two years later they did.

It was enough to turn every $5,000 invested into almost $200,000.

My next 39x winner, I predict, is another space stock.

But it’s not SpaceX.

It’s a tiny company, one-one thousandth the size of SpaceX.

And October 1st, we expect a NASA announcement to kick off a 39X run for this stock.

Here’s where I’d put my money today >>>

“The Buck Stops Here,”

Programming Note:

I'm flying to Germany for a conference and will be gone for a week.

I'll be back next week.

In the meantime, you'll still get your Dylan's Diary every day.

We've recorded some great educational videos to share while I'm away.

God bless you.

Have a wonderful day and a wonderful week.