From Bloomberg, February 5:
Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 — a mind-boggling tide of cash earmarked for new data centers and the long list of equipment needed to make them tick, including artificial intelligence chips, networking cables and backup generators.
The spending planned by Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., all in pursuit of dominance in the still-nascent market for AI tools, is a boom without a parallel this century. Each of the companies’ estimated outlay for this year would set a high-water mark for capital spending by any single corporation in any one of the past 10 years, according to Bloomberg data.
The search for a comparison to the high-flying spending projections — which came as the four reported earnings in the past two weeks — requires going back at least as far as the telecommunications bubble of the 1990s, and perhaps to the build-out of the US railroad networks in the 19th century or postwar federal investments in interstate highways or even New Deal-era relief programs.
The ever-larger numbers — in total, an estimated 60% increase from a year ago — means yet another acceleration in the wave of data center construction taking place around the world. The sprint to build these sprawling facilities, which hold racks of humming servers powered by expensive processors, has pinched energy supplies, raised worries of inflated prices for other users, and brought developers into conflict with communities worried about competition for power or water. It also raises the risk that construction spending by a narrow set of affluent companies, already accounting for a rising share of economic activity in the US, will distort big-picture economic data.
The four companies “see the race to provide AI compute as the next winner-take-all or winner-takes-most market,” said Gil Luria, an analyst at DA Davidson. “And none of them is willing to lose.”
Last week, Meta said full-year capex will rise to as much as $135 billion — a potential jump of about 87%. Microsoft the same day reported a 66% increase in second-quarter capital spending, topping estimates, and analysts project it will shell out almost $105 billion in capex for the fiscal year ending in June. The news triggered the second-biggest single-day decline in market value for any stock.
Alphabet, founded in a garage south of San Francisco in 1998, on Wednesday rattled investors when it revealed a capital spending forecast that exceeded not just analyst estimates, but the spending of a vast swath of US industry — it plans to spend as much as $185 billion. And Amazon on Thursday bested that with a planned $200 billion in capital expenditures for 2026, also sending its shares tumbling in extended trading.
By contrast, the largest US-based automakers, construction equipment manufacturers, railroads, defense contractors, wireless carriers, parcel delivery outfits, along with Exxon Mobil Corp, Intel Corp., Walmart Inc. and the spun-off progeny of General Electric — 21 companies — are projected to spend a combined $180 billion in 2026, according to estimates compiled by Bloomberg....
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