Author: Nick Little, Principal Financial Adviser at Professional Private Wealth
Is AI Today’s Steam Engine?
Nick Little - August 31, 2026
Is AI Today’s Steam Engine?
Billions are being poured into Artificial Intelligence infrastructure every month. Goldman Sachs Research projects that AI-related investment around the world in 2026 will total $1 trillion (USD).
Some economists believe future generations may look back on today’s AI boom the same way we look back on the early days of the Industrial Revolution.
AI and the Industrial Revolution: History Doesn’t Repeat, But It Often Rhymes
Imagine being an investor in 1820. You hear people talking about steam engines, railways and factories. Most of it seems expensive, speculative and difficult to understand yet those technologies would go on to reshape the entire global economy.
Today, many investors feel the same way about Artificial Intelligence. We hear staggering numbers about data centres, computer chips, power consumption and AI spending. It’s easy to dismiss it as hype.
But according to research from Columbia Business School economist Stijn Van Nieuwerburgh, the scale of investment currently flowing into AI infrastructure not only resembles the type of capital spending seen during previous transformational periods in history, but it is eclipsing it.
Source: Stijn Van Nieuwerburgh, Columbia Business School
The Industrial Revolution required railways, ports, factories and electricity networks before productivity gains could flow through the economy. AI requires something similar: vast data centres, semiconductor manufacturing, power generation and digital networks before its full economic benefits can emerge.
What makes today’s AI boom so remarkable is the scale of investment. Companies are spending hundreds of billions of dollars building the infrastructure to support future AI demand. Entire data centres are being built before they have a tenant. Power utilities are expanding generation capacity to meet future demand. Chip manufacturers are investing unprecedented sums to increase production.
The interesting question for investors is not whether every dollar being spent on AI will prove worthwhile. History suggests some of it won’t. Rather, the question is whether AI becomes a foundational technology that changes how businesses operate, how goods and services are produced, and how people work.
Whether the optimism proves fully justified remains to be seen. But one thing is becoming increasingly clear: the scale of investment suggests some of the world’s largest and most sophisticated companies believe we are witnessing the early stages of a transformation that could define the next several decades. For investors, that’s a development worth paying attention to.
Nick’s Take
Every generation gets a handful of truly transformative technologies. Railways. Electricity. The internet. AI may ultimately join that list.
Whether the current excitement proves justified remains to be seen, but the scale of investment suggests many of the world’s largest companies believe we’re at the beginning, not the end, of this story.
As investors, our job isn’t to predict every winner. It’s to remain disciplined, diversified and ready to benefit from the long-term trends shaping the future.
If you’re interested to understand what work we have been doing to navigate the impact of AI on investment portfolios, get in touch with Professional Private Wealth to book a conversation with Nick on 0408 702 056 or click below.
IMPORTANT INFORMATION
The information provided in this communication is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this communication you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
This communication may contain certain ‘forward looking’ statements. Forward looking statements, opinions and estimates provided are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements.
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