AI spending boom: Tech giants’ capex rivals GDP of smaller nations
Big Tech's AI-related capital expenditure is projected to reach $725 billion, surpassing the GDP of smaller nations, with a 75% year-on-year increase. Google Cloud's revenue exceeded $20 billion for the first time, growing 63% year-on-year, while other tech giants like Microsoft and Amazon also invested heavily in AI infrastructure.
Big Tech's push into artificial intelligence is driving capital expenditure to unprecedented levels, with total AI-related spending projected to reach $725 billion. The spending trajectory is accelerating sharply, up around 75% year-on-year. Google Cloud surpassed $20 billion in revenue for the first time, recording 63% year-on-year growth. Alphabet CEO Sundar Pichai indicated that capital expenditure in 2027 is expected to be significantly higher. Microsoft's annualised capital expenditure has increased from around $150 billion to approximately $190 billion. The scale of investment is beginning to weigh on cash generation, with companies like Alphabet, Meta Platforms, and Microsoft experiencing a decline in free cash flow.
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