Artificial intelligence is driving the biggest investment wave in U.S. history. Spending on the technology has already surpassed the price tag on the Manhattan Project and NASA’s Apollo Program. But the trillion-dollar bet on AI has some investors spooked — and questioning whether profits will outweigh the massive cost.
The scale of spending is undeniable. Amazon, Google, Microsoft and Meta have already dished out record amounts on AI, spending $130.6 billion in the first three months of 2026 alone. The eye-watering figure is more than three times what the Manhattan Project spent to develop nuclear bombs. (1)
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Now, three out of the four companies have revealed plans to increase their AI spending, which is anticipated to be nearly $700 billion by the end of the year. (2)
In a post on X, NYU professor and AI researcher Gary Marcus said the spending is “sheer insanity,” calling it the “greatest capital misallocation in history.” (3)
Yet the financial results tell a more complicated story. Recent earnings from all four companies exceeded Wall Street expectations, suggesting that, at least for now, AI investments could be paying off. (4) Microsoft, Google-owner Alphabet, Amazon and Meta all reported double-digit revenue growth.
Investors, however, are still uneasy. Shares in Meta dipped by 7% after CEO Mark Zuckerberg said the company needed to spend billions more on AI to achieve its goals. (5)
The cost of AI
Soaring investment doesn’t necessarily translate into greater AI capacity. Costs are rising rapidly, particularly for the components that power AI. Memory chip prices alone have seen a 50% increase in price this year so far and are expected to keep rising. (6)
“We are increasing our infrastructure capex forecast for this year,” Zuckerberg said on April 29. “Most of that is due to higher component costs, particularly memory pricing.”
Microsoft is facing similar pressures, with tens of billions of dollars from its AI budget expected to go to parts alone.
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Should investors be worried?
Some analysts have drawn parallels between the AI investment boom to the dot-com bubble of the late 1990s. Billionaire investor Ray Dalio has previously said the current AI boom resembles about 80% of the euphoria seen before the 1929 crash or the 2000 dot-com collapse. (7)
