Alphabet, Amazon, Meta, and Microsoft have collectively forecast capital expenditures that will reach $650B in 2026, with most of the increases earmarked for new data centers and other AI endeavors. Each company estimates that this year's capex spend will either near or surpass their budgets for the past three years combined, setting a high-water mark for capital spending by any single corporation in any one of the past 10 years, according to Bloomberg data.
- Meta said full year capex will rise to as much as $135B, a potential 87% increase.
- Microsoft reported a 66% increase in Q2 capital spending, with estimates projecting the company to shell out $105B for the fiscal year ending in June.
- Alphabet plans to spend as much as $185B, compared with the $119.5B analysts expected, and up from $91.4B in 2025.
- Amazon reported a planned $200B in capex for 2026, up from $131.8B last year.
The four companies lost over $950B in market value since releasing their latest earnings and outlooks, while shares of companies like Nvidia, AMD, and Broadcom, which make the hardware, increased.
Bloomberg's Matt Day and Annie Bang wrote:
“The sprint to build these sprawling facilities, which hold racks of humming servers powered by expensive processors, has touched off an unprecedented level of borrowing, pinched energy supplies and brought developers into conflict with communities worried about rising power and water costs. It also raises the risk that expenditures by a narrow set of affluent companies, already accounting for a rising share of economic activity in the US, could distort big-picture data such as construction spending, gross domestic product, durable goods and employment reports, potentially making the overall economy look healthier than it actually is.”
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Analysts estimate that 25–40% of Microsoft’s AI infrastructure spend is OpenAI-related, fulfilling datacenter and processing commitments it made to the company, which has simultaneously committed to spending $250B on Microsoft Azure cloud services.
I'm curious to know how much capex is being spent across the industry to fulfill the hundreds of billions of dollars in commitments that OpenAI has made to various partners including Microsoft, Oracle, Broadcom, Nvidia, AMD, Amazon, CoreWeave, and Google. And what happens to those data centers if OpenAI can't come through on those commitments?
Will datacenters be the shopping malls of 2036? That'll be a lot of Halloween Superstores.