Warsh: AI Could Become a "New Factor of Production," Top Two AI Firms' Annualized Token Sales Exceed $100 Billion

Federal Reserve Chair Kevin Warsh, in his Jackson Hole speech, focused specifically on artificial intelligence, calling current AI development a "turning point in history" whose pace has even exceeded the most optimistic expectations from a few years ago. Warsh noted that corporate capital expenditures are currently growing at the fastest pace since 2021, with a roughly 9% increase over the past four quarters, more than half of which is tied to AI buildout. He said future focus will be on the "second-order change" in AI capex growth—namely, whether the pace accelerates further.

Warsh stated that the annualized token sales of two leading AI companies have now surpassed $100 billion, up more than 500% from a year ago. He said the Fed now views AI as "a new variable" that could become a new factor of production, with its development set to influence economic growth and monetary policy formulation.

Warsh also raised open questions: whether AI can deliver sustained productivity gains, whether token usage and labor are complementary or competitive, and whether the economic surplus created by AI will ultimately be captured by AI labs, chipmakers, energy suppliers, or cloud service providers—none of which have clear answers yet.

[Rhythm]