A COMMON way to describe the history of the technology industry is by product cycles. The 1990s was the era of the PC; then came the internet and related services, followed by mobile; and now artificial intelligence looms. But there is a different way to think about tech: it is switching from an era of hoarding profits to one of reinvestment. Take a crude yardstick of spending: the physical footprint of the five most valuable American tech firms. A decade ago if you added up all the land they occupied, you got to an area one and a half times the size of Central Park. Now an ongoing splurge means they use ten times more space, or 600m square feet (55m square metres), roughly the size of all of Manhattan. This shift to redeploying profits is seismic.

Amazon accounts for two-fifths of that space—the equivalent to anything south of Grand Central. Way back in 1998, its boss, Jeff Bezos, had a different message, telling his shareholders that its business model was “cash-favoured and capital efficient”. The capital-light approach was in vogue in China, too, until recently. At the end of last year Alibaba’s market value was similar to the total for China’s biggest 700 industrial firms, yet it had 12% of their assets. Investors loved tech firms’ ability to crank out huge profits with tiny balance-sheets, but economists were alarmed by it. Two years ago Lawrence Summers fretted that tech might depress overall investment. Digital disrupters would sap incumbent firms’ confidence to invest while spending little themselves. This was part of a wider malaise he called “secular stagnation”.

But over the past two years it has become clear that tech firms no longer skimp. Mr Bezos’s firm had capital expenditure of $25bn last year (including leases), making it the fourth-biggest spender in the world, just above Gazprom, a Russian energy monster with 172,000km of pipelines. America’s national accounts take a broader view of investment than company accounts do, by including research and development (R&D) and content creation. Using this definition, total investment by a sample of the ten biggest American and Chinese tech firms has tripled over five years, to $160bn. If you include acquisitions and stakes bought in smaller firms, this rises to $215bn. Of this figure, two-fifths was spent on intangible assets, a third on physical plant, and the rest on deals. Overall, these firms now have the same propensity to reinvest as other listed companies.

It is not just the giants. Xiaomi, a Chinese smartphone company, spent $2bn over the past three years. WeWork, an office-rental operation that is viewed by some as a technology play, invested a billion dollars on physical assets in 2017. In America, if you include all firms, public and private, tech accounts for an estimated fifth of all investment across the economy and at least half of the absolute growth in investment.

The boom has four causes. First, tech firms are undertaking activity on behalf of other companies. Instead of building data centres, non-tech companies lease capacity from cloud-based providers such as Amazon Web Services (AWS, the giant’s cloud arm) and Microsoft, and in China, from Alibaba and Tencent. AWS is investing $9bn a year, or about the same as General Motors. Second, the online and physical worlds are blurring. Chinese consumers roam between e-commerce sites and shops, so tech firms there are building retail outlets. Alibaba has a chain called Hema. Amazon bought Whole Foods last year. As tech sprawls into the old economy, it is acquiring more heft. Alphabet’s “other bets division”, which includes its self-driving cars, contains over $2bn of physical assets.

A third trend is that tech firms are acquiring access to technology and data. Microsoft bought LinkedIn for $24bn in 2016. Chinese firms are obsessed with taking non-controlling stakes in startups. Alibaba and Tencent have spent $21bn in the past five years, making them dominant in China’s venture-capital scene. A final probable cause of the investment boom is sheer indiscipline. One warning sign is a rash of flash property activity. Apple’s new headquarters in California reportedly cost $5bn. Finalising the doorknob designs took a year and a half.

For investors, tech’s pivot is a conundrum. Monopolies that crank out profits on little investment are very valuable. If they can reinvest those profits at high returns they are even more so. But the danger is a loss of focus. For the sample of ten big tech firms each dollar of fixed assets cranks out five dollars of sales, half the level of a decade ago. The more diverse firms get, the more ordinary the returns may be. Longtime big spenders such as Shell and Intel are experts at allocating capital. Compare that to Facebook. Its annual investment (including R&D) has gone from $3bn to $14bn in five years. Based on its approach to customer privacy, it is easy to imagine that behind the scenes things are slapdash.

Hey big spenders

For the economy, tech’s pivot has plenty of benefits. Apple’s headquarters has created at least 13,000 full-time construction jobs, according to Reuters. And the big tech firms’ savings are no longer rising as a share of the economy. Take Alphabet, Amazon, Apple, Facebook, Microsoft and Netflix. Their free cashflow (the cash they have left over after investment), has dropped slightly as a share of American GDP, to about 0.6%. Some blue-chip firms such as Ford and Walmart are fighting back by investing heavily in new technologies, too. The last tech craze, in 1998-2001, created a glut of network capacity that ultimately boosted productivity.

In the long run the drawback is that the more the tech giants reinvest, the larger they will get, amplifying an already glaring antitrust problem. In the short run the catch is that the tech boom, which is already frothy, could burst, and a sudden cutback in capital spending could hurt the economy more deeply than most people realise. Tech is already integral to America’s news cycle, its political cycle and the rhythms of its stockmarket. Now it may have a large sway over the investment cycle, too.