Barron's Cites the "Rule of 25": The AI Rally and U.S. Stock Market Surge May Not Be Over Yet

Glonghui, August 31｜According to Barron's, which cites historical experience, AI investment has not yet reached the threshold that could trigger a crisis, indicating that the current AI boom and the rise of the US stock market may not be over yet. Analysts have proposed a historical benchmark for measuring technology investment booms, known as the "Rule of 25." Its core concept is that during investment booms driven by major technological revolutions, the US economy can typically absorb related spending equivalent to about 25% of its economic output, and only then does it face potentially unbearable pressure. For example, at the beginning of the railroad construction boom in the 1860s, US GDP was about $1 billion per year, and cumulative railroad-related spending eventually reached approximately $250 million, followed by the economic collapse in 1873. By the end of the 1990s during the Internet bubble, the market invested about $1.5 trillion in infrastructure, while the US economy was about $6 trillion—again close to this historical proportion. According to this historical standard, although current AI capital expenditure has reached an astonishing scale, it still has not reached the level equivalent to 25% of US economic output. This means that the AI investment boom may still have some way to go before it truly approaches the historical threshold that could trigger a crash, so the AI market and US stocks may still have room for further growth.