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Investment in physical capital collapsed during the Great Recession, and while growth subsequently resumed, the capital stock remains below trend (Hall in Quantifying the lasting harm to the US economy from the financial crisis, NBER Macroeconomics Annual, Bureau of Economic Research, 2014). We explore firm-level data on investment and document that investment fell relative to fundamentals at the turn of the millennium—well before the Great Recession. This downturn in investment coincides with a shift in employment toward services and cognitive skills—the “polarization” described by Autor et al. (Am Econ Rev 96(2):189–194, 2006), as a possible consequence of off-shoring and automation. An analogous sorting of firms into industries shows a shift of investment toward spatially “grounded” industries, such as energy and telecommunications, from which capital cannot be relocated. Investment shifts away from production sectors, such as manufacturing, which can be relocated. While high-tech firms grow in number and value, this growth is associated with a flat share of capital investment. For these sectors, we document a shift toward intangible, rather than physical, capital. The “hollowing out” of investment, like labor, carves out manufacturing and production sectors, leaving grounded industries that are less susceptible to off-shoring and cognitively intensive industries that are growing in intangible, rather than fixed, capital.