AI CapEx of Big Tech to Surpass US Defense Spending by 2027
Combined AI capital expenditure by Alphabet, Amazon, Meta, Microsoft, and Oracle is projected to reach 3.2% of US GDP in 2027, overtaking the 2.7% of GDP allocated to national defense.
The AI spending boom is dramatically reshaping the US economy. According to projections, the combined AI capital expenditure (CapEx) of Alphabet (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT), and Oracle (ORCL) is set to rise to approximately 3.2% of US GDP by 2027. If this forecast materializes, annual CapEx from these five firms will surpass national defense spending, which is projected at roughly 2.7% of GDP next year.
For the current year, AI CapEx among this group is expected to increase to about 2.5% of GDP, up from 1.5% in 2025, and nearly matching the estimated defense spending level. In dollar terms, AI CapEx is projected to exceed $800 billion in 2026 and climb further to a record $1.1 trillion in 2027.
These figures underscore the immense scale of investment in artificial intelligence infrastructure by the largest US technology companies.
Source: The Kobeissi Letter