Tech giants’ AI capex to hit $700B by 2026, impacting cash flow

Photo: Steve A Johnson / Pexels AI spending by major technology companies is on the rise, as firms transition from constructing infrastructure to implementing AI technologies. This development comes as the estimated capex for AI-related projects by tech giants like Amazon, Microsoft, and Alphabet is expected to surpass $700 billion in 2026, a significant jump from $80 billion in 2019. The shift in spending is benefiting companies involved in power, cooling, and electrical equipment, including Caterpillar and Schneider Electric. However, the heavy investment in AI infrastructure is putting pressure on the free cash flow of hyperscalers and could lead to substantial debt financing. As the AI spending landscape evolves, market participants have shown interest in how this might affect companies like Anthropic. Currently, the market pricing suggests mixed views on whether Anthropic will achieve a valuation of $600 billion by the year’s end. This is reflected in fluctuating odds for the valuation milestone, with notable activity in related prediction markets. Key Takeaways The increase in AI spending appears to be consistent with expectations of growth for companies benefiting from infra...