Big Tech plans $720B in AI infrastructure spending this year

Wall Street reacted sharply to the spending announcements, triggering a selloff in tech stocks. Alphabet’s stock dropped 13% in a single day after its chief business officer acknowledged that AI-driven search features like AI Mode are reducing monetization in core Search ads, which grew only 12%—down from 17% year-over-year. Executives, including Alphabet’s CFO Anat Ashkenazi and Amazon’s CEO Andy Jassy, signaled further increases in 2027, framing the investments as critical for long-term growth. Meta’s CEO Mark Zuckerberg noted that its AI agent program, Muse, may only become profitable if compute costs drop tenfold next year, requiring heavy spending. Meanwhile, Anthropic’s third-quarter revenue surged to $17 billion, but compute costs hit $17.5 billion, leaving it with a net loss. The startup also committed nearly $900 billion to future data center builds, including purchases of Google’s TPU chips.