years have passed since Open AI IT investment. Starting in 1995, firms ramped up spending on computer hardware, network infrastructure and software. Between 1995 and 2000, their investment in information-processing equipment and software rose by an average of 20% a year in real terms. Research by Kevin Stiroh of the Federal Reserve Bank of New York has found that firms were investing nearly $400bn in such technologies by 1999, accounting for over 30% of all non-residential fixed investment. By contrast, recent capital expenditure has been underwhelming. Over the past two years, business investment in information-processing equipment and software has grown by around 4% a year. AI investment may be more focused on intangible assets, such as algorithms and data, which are more difficult to measure than physical capital. Payments to startups for custom tools may show up as operating expenses in the statistics, for example. Even so, you would expect at least a rise in software investment. Instead, spending on both pre-packaged commercial software—such as Microsoft 365—and custom-built systems, including AI tools tailored to specific workflows, is surprisingly low. Growth in software investment over the past year was about three times lower than in the late 1990s in real terms, and remains well below the long-term average. The second half of the 1990s also witnessed a dramatic fall in the quality-adjusted price of computer hardware and software. From 1995 to 2000 prices for information-processing equipment and software dropped by a third, producing cheaper and better computers. The AI era has yet to see a corresponding decrease in prices: over the past five years, those for software and information-processing equipment have barely budged. Indeed, in the most recent quarter, the price index for these goods rose at an annualised rate of 4%. Even as the underlying technology is becoming cheaper, middlemen who repackage AI