Big Tech Unveils $650 Billion AI Capex Wave for 2026

This article first appeared on GuruFocus.

Investors are being forced to recalibrate expectations as Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) collectively project capital expenditures approaching $650 billion in 2026, largely directed toward data centers and the infrastructure required to support artificial intelligence workloads. The guidance, delivered alongside earnings over the past two weeks, implies roughly a 60% increase from a year earlier and represents a level of corporate investment that has few modern parallels, according to Bloomberg data. The scale of the build-out could accelerate global data center construction while also intensifying concerns around power availability, water usage, and the possibility that spending by a small group of cash-rich companies may skew broader economic indicators.

Recent company disclosures highlighted how sensitive markets have become to the pace of AI-related spending. Meta said full-year capital expenditures could reach as much as $135 billion, representing a potential increase of about 87%, while Microsoft reported a 66% jump in second-quarter capital spending, exceeding estimates, with analysts projecting nearly $105 billion for its fiscal year ending in June. That announcement coincided with the second-largest single-day decline in market value for any stock. Alphabet added to investor unease after forecasting capital spending of up to $185 billion, and Amazon followed by outlining plans for roughly $200 billion in capital expenditures for 2026, moves that weighed on both companies’ shares despite core business results that exceeded expectations.

The investment surge rests on the shared assumption that tools such as OpenAI’s ChatGPT and rival AI models will increasingly shape work and consumer activity, even as questions remain around execution, timing, and returns. Building these systems requires linking thousands of high-priced chips, intensifying competition for Nvidia (NASDAQ:NVDA) processors and manufacturing capacity at Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), alongside shortages of skilled labor and construction resources. While the four companies remain dominant cash generators, their willingness to deploy capital at this scale has tested investor patience, with some market participants expressing concern that the economics of AI adoption may take longer to justify the spending, even as revenues across advertising, cloud computing, e-commerce, and software have remained resilient.