AI Cost 2nd Largest In US History, More Than Highways, Railroads, Moon Land

The amount of money tech companies are spending on building data centers and other infrastructure to support their development of AI is approaching the largest in US history, exceeding, in adjusted terms, the investment in the nation's railroads, interstate highway system - and only slightly less than what it cost to acquire the Louisiana Purchase, which doubled the size of the United States. 

The only question is whether this investment will pay off like those did. JL

Meghan Bobrowsky and colleagues report in the Wall Street Journal:

It’s dwarfed only by the Louisiana Purchase, completed in 1803, which doubled the size of the U.S. It's bigger than the railroad expansion of the 1850s, the Apollo space program that put astronauts on the moon in the 1960s and the decadeslong build-out of the U.S. interstate highway system that ended in the 1970s. We're talking about data centers being built in the AI boom. Microsoft's, Amazon's, Alphabet's and Meta's capital spending has increased as a percentage of their revenues in the past few years. In 2026, Meta’s spending could amount to more than 50% of its sales for the first time ever.

It’s bigger than the railroad expansion of the 1850s, the Apollo space program that put astronauts on the moon in the 1960s and the decadeslong build-out of the U.S. interstate highway system that ended in the 1970s.

We’re talking about the data centers now being built and financed by some of the world’s biggest companies in the artificial-intelligence boom.

Four U.S. tech giants—Microsoft MSFT 3.11%increase; green up pointing triangle, Meta Platforms META 2.38%increase; green up pointing triangle, Amazon AMZN -0.76%decrease; red down pointing triangle and Alphabet’s GOOGL 0.45%increase; green up pointing triangle Google—are planning to spend up to $670 billion to build out AI infrastructure this year alone as they scramble to increase the computing power needed to operate and scale their AI-related endeavors.

It has become an increasingly expensive project, one that the companies finance with their billions of dollars in advertising, cloud and subscription revenue. And if you compare this spending to some of the biggest capital efforts in U.S. history by percentage of gross domestic product, you can see exactly how staggering the figures are.

In fact, it’s dwarfed only by the Louisiana Purchase, completed in 1803, which doubled the size of the U.S.

Capital spending

Amazon

Microsoft

Alphabet

Meta

Totals, quarterly

As a percentage of sales, annually

$125 billion

40%

100

30

75

20

50

10

25

0

0

2017

’18

’19

’20

’21

’22

’23

’24

’25

2017

’18

’19

2020

’21

’22

’23

’24

’25

Note: Data are for calendar quarters and years. Capital expenditures figures include finance leases.
Source: the companies

The companies’ capital spending has been increasing as a percentage of their annual revenue the past few years. In 2026, Meta’s spending could amount to more than 50% of its sales for the first time ever, according to analyst projections.

Investors and analysts initially expressed concern about Meta’s spending plans for 2026 but gave the company a reprieve after it posted record quarterly earnings attributed to AI-driven improvements, and forecast even bigger potential growth in the current quarter.

Amazon’s investors, however, didn’t take kindly to its plans to ramp capital spending up by nearly 60% to $200 billion this year: On Friday, the company lost $124 billion in market value.

Market capitalization vs. projected capital spending for 2026

Meta

Amazon

Microsoft

Alphabet

$1.67T

$2.26T

$2.98T

$3.91T

$135B

$200B

$150B

$185B

Note: Data as of market close on Friday. Spending numbers are the high-end projections for Meta and Alphabet.
Sources: Dow Jones Market Data (market capitalization); the companies (projected capital expeditures); Visible Alpha (Microsoft projected capital expenditures)