Explains why measured GDP understates the AI hardware boom, relevant when reading economic signals about compute investment.
Key takeaways · AI-distilled
US investment in computing equipment is roughly $400B a year, nearly triple 2023, yet measured GDP impact is modest; Epoch says the usual explanation, that imports are subtracted from GDP, is incomplete.
The gap arises because fabless firms like Nvidia design chips in the US that are made and sold abroad: no physical goods leave the US and no foreign buyer pays explicitly for the IP, so neither a goods nor an IP export is recorded.
Epoch checked goods, IP and service exports and merchanting, found Nvidia's value-add in none of them, and confirmed this with the Bureau of Economic Analysis; if Nvidia keeps growing at its current pace the gap could reach almost 2 points of growth a year by 2028.
Fixes exist but could take years: 2025 international guidelines already call for recording factoryless manufacturers' overseas sales as goods exports, and Epoch outlines recording their markups as IP exports instead, which departs from standards but avoids political resistance.
