Big tech plans about $650B in 2026 spending for AI data centers

In short: Several of the biggest US tech companies plan to spend roughly $650 billion in 2026 on data centers and AI chips to keep up with demand for AI.

What's going on

Alphabet, Amazon, Meta, and likely Microsoft are preparing a large jump in spending in 2026, focused on the physical backbone needed to run AI. That includes data centers (large buildings full of computers) and specialized AI chips (the parts that do the heavy number crunching).

The biggest numbers are coming from Amazon, which could spend up to $200 billion in 2026, up from $128.3 billion in 2025. Alphabet could spend up to $185 billion, about double its $91.4 billion in 2025. Meta could spend up to $135 billion, up from $72.2 billion.

Companies say this is being driven by strong demand for AI services, especially in cloud computing, which is like renting computing power instead of buying your own computers. But there is also a supply problem. Key chip suppliers like TSMC cannot instantly make enough chips, which pushes companies to commit money earlier and in bigger chunks.

What to watch

Investors and analysts are split on how quickly these costs will pay off. Amazon’s stock fell after its spending plans, with concerns that heavy spending can squeeze profit in the short term. Another risk is “vendor lock-in,” which is when a company gets stuck using one provider’s tools and prices, similar to signing a long contract that is hard to exit.

Source: NYTimes