Big Tech’s spending spree is about far more than capex

Subscribe to enjoy similar stories. As fourth-quarter Big Tech earnings approached, the usual discussions of sales growth and profits took a back seat to the flood of capital expenditures on artificial-intelligence data centers. In 2025, four companies–Amazon.com, Microsoft, Alphabet and Meta Platforms—spent over $400 billion, roughly the gross domestic product of Pakistan, according to the International Monetary Fund.

As revealed in the earnings reports over the last two weeks, this number is set to continue its sharp rise in 2026. Amazon gave guidance for $200 billion in 2026 capex, with about $180 billion and $125 billion for Alphabet and Meta, respectively. Unlike the others, Microsoft has a fiscal year that ends in June, but in its first half of 2026 it spent $72 billion.

If it keeps up that pace, 2026 capex for the four companies will be about $650 billion, roughly the size of the Argentine economy, the 26th largest in the world. Spending at this scale will transform the major financial statements of these companies. In the income statement, where we see revenue and earnings, capex is accounted for through depreciation costs.

Instead of expensing capex all at once, it happens over several years. In AI data centers, the servers and networking equipment are depreciated over five to six years, with the rest coming over longer periods. According to Alphabet, servers alone will account for 60% of its total spend.

That means if Alphabet spends $180 billion on AI data centers, about $108 billion will be for servers. Depreciated over six years, that’s $18 billion a year in new expenses starting next year, before we even account for all the non-server capex. Alphabet’s 2025 depreciation expense was $21 billion, so it’s