Tech Giants' $600B AI Infrastructure Spend Raises Overcapacity Questions

The four largest US technology companies have now committed a combined $600 billion in capital expenditure for AI infrastructure over the 2026-2028 period, a staggering investment that has drawn both admiration and investor skepticism.

Microsoft leads with $180 billion in planned AI spending, followed by Google ($155 billion), Meta ($135 billion), and Amazon ($130 billion). The investments are primarily directed toward data centers, custom AI chips, and the power infrastructure needed to run them.

"The scale of investment is unprecedented in the history of technology," said Vi Agregado, quantitative analyst at TMQ. "The question is whether AI revenues will grow fast enough to justify the capex, or whether we're building the infrastructure equivalent of a housing bubble."

Revenue from AI services is growing rapidly but remains a fraction of total capex. Microsoft's AI cloud revenue run rate reached $25 billion in Q4, while Google's AI-related revenue was approximately $18 billion. At current growth rates, payback periods extend to 5-7 years.

The spending boom has been a boon for semiconductor companies (Nvidia's data center revenue topped $35 billion last quarter), power utilities, and commercial real estate in data center corridors. However, it has also raised environmental concerns, with data center electricity consumption projected to reach 4% of US total by 2028.

AI capex as % of revenue (2026E):

• Meta: 55%
• Microsoft: 28%
• Google (Alphabet): 24%
• Amazon: 18%