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A few days ago, the Indian government revealed its yearly budget for the financial year 2026-27. The total spending set by the central government for the whole nation is about $670 billion. Just a few days later, an incredible number emerged in the tech industry. This number, according to Bloomberg, is $650 billion. It represents the amount that a small number of tech firms are projected to invest in developing AI and related technologies in 2026. Four companies, namely Amazon, Google, Meta, and Microsoft, are anticipated to spend almost the same amount on AI as the entire budget of the central government. These figures are just estimates. It is likely that, similar to the trend of recent years, tech companies will actually spend more than they have initially planned. Similarly, it can also be suggested that India might — as it often does — end up spending slightly more than its budget.
Nonetheless, the projected capital spending for AI and related technologies in 2026 is extraordinarily large. As tech companies share their financial outcomes, they are also outlining their future costs. Recently, Google announced that its spending for 2026 would be about $185 billion. Shortly thereafter, Amazon disclosed its own figure — $200 billion. A few weeks ago, Meta had estimated its spending to be around $135 billion, while industry talk suggests that Microsoft’s spending is expected to be about $120 billion. A significant portion of this funding is focused on building AI infrastructure, which includes large data centers, advanced servers, networking tools, and special chips that drive everything from chatbots and image creation to business AI solutions.
Currently, it appears that Amazon may be the largest spender. The company has informed its investors that its capital spending could reach around $200 billion in 2026, mainly due to the increasing demand for AI capabilities on its AWS cloud platform. Alphabet is not too far behind. Google's parent company has indicated that its expenses could rise to between $175 billion and $185 billion, with a focus on AI and cloud infrastructure in its plans. Microsoft and Meta are also committing significant amounts to secure computing resources for their AI goals. Meta expects its capital spending to be between $115 billion and $135 billion in 2026. Meanwhile, Microsoft has already demonstrated a rapid increase in its investments. Last week, the company announced a 66 percent rise in capital spending for the second quarter, surpassing market predictions. Analysts now suggest that Microsoft's total capital expenditure could reach around $120 billion for the fiscal year ending in June.
Though technology firms have been increasing their spending over the past few years, this year the amounts are reaching astonishing levels. The figures are so high that just four major tech firms are expected to spend as much or even more than the Indian government. The Indian government must allocate funds for numerous needs such as defense, food assistance, pensions, health services, education, infrastructure, technology, and social programs for a huge population of about 1.5 billion people. The money tech companies plan to spend on AI by 2026 is comparable to the entire GDP of several nations, including developed nations like Sweden, which had a GDP around $620 billion in 2025.
The driving force behind this AI investment appears to be the belief that the tech sector is reaching a crucial point. The perspective is that whoever becomes dominant in AI will remain unbeatable. This idea was clearly expressed by Amazon's CEO Andy Jassy on February 6 when he stated, "I truly believe that every customer experience we know today will be transformed with AI. So we’re going to invest heavily here and strive to be the leader in this area," during Amazon's financial announcement. Notably, Amazon is planning to spend $200 billion on capital expenditures for 2026, shortly after laying off around 16,000 workers. Moreover, the company has let go of about 30,000 employees since October. Therefore, if Amazon is willing to invest in AI, why is it also reducing its workforce? This contradiction lies at the core of the tech industry’s growth driven by AI. As tech companies reshape around AI, the significant spending should raise concerns among tech workers rather than give them hope.
Resources are limited, and there is worry that as Google, Meta, Amazon, Microsoft, and others ramp up their investments in AI systems, they might reduce costs by cutting jobs. Recently, when tech firms have announced layoffs, they have not clearly stated that reducing the number of workers is to free up funds for AI systems, but that implication has been present. Last year, when Microsoft laid off 9,000 employees, they told the BBC: "We are still making the necessary organizational changes to ensure the company is well-prepared for success in an ever-changing market".
Similarly, not long ago when Amazon laid off 16000 workers, the company pointed out that it would keep investing in what it sees as important areas — especially AI. “As we make these adjustments, we will still be hiring and putting money into key areas and roles that are vital for our future,” the company mentioned in a blog post. Other tech firms are experiencing the same trend. For instance, Meta has recently reduced its efforts in the metaverse and virtual reality. It released 10 percent of its Reality Lab employees while continuing to advance its AI initiatives. In other words, in the next few months as tech companies increase their spending on AI systems, there is a chance that workers may be considered less important than GPUs and servers.
