Inside $1.46 trn AI spending spree reshaping the world's biggest tech firms

Amazon, Microsoft, Alphabet and Meta have built $1.46 trillion in physical assets through AI investments, overtaking several global oil majors

The artificial intelligence (AI) race is reshaping the world's biggest technology companies, turning them from software-focused businesses into some of the largest infrastructure owners globally.

 

The combined value of property, plant and equipment (PP&E) held by Amazon, Alphabet, Microsoft and Meta has climbed to $1.46 trillion, up 140 per cent over the past three years, Nikkei Asia reported. The surge reflects aggressive spending on AI data centres, servers and networking equipment, allowing the four companies to rival — and, in some cases, surpass — global oil majors in physical assets.

 

AI spending pushes tech firms ahead of oil giants

 

The news report, citing data from QUICK FactSet, said the combined PP&E assets of the four US technology companies rose 48 per cent year-on-year by the end of June.

 

Amazon now leads the group with PP&E assets worth $538.7 billion, nearly double its level three years ago. The company has overtaken Saudi Aramco, which had been the world's largest non-financial company by physical assets until last year.

 

Alphabet and Microsoft now each hold more than $330 billion in PP&E assets, moving ahead of major oil companies such as Exxon Mobil and PetroChina. Meta, although the smallest among the four, has also expanded rapidly. Its physical assets are now worth more than twice those of Toyota Motor, the news report said.

 

Data centres drive record investment

 

The rapid rise in assets is largely due to investments in AI infrastructure. At Alphabet, more than 70 per cent of PP&E consists of technical infrastructure such as servers, networking equipment, land and buildings used for data centres.

 

The four companies are continuing to expand their AI capacity at a rapid pace. Their combined capital expenditure could reach $760 billion in 2026, an increase of around 85 per cent from the previous year.

 

The spending highlights how AI has changed the business model of major technology firms. Companies that once relied mainly on software are now investing heavily in physical infrastructure to support growing demand for AI computing.

 

Hidden debt also rises sharply

 

The AI investment boom is also creating large financial commitments that do not yet appear fully on company balance sheets.

 

By the end of June, the four companies had around $2.3 trillion in off-balance-sheet obligations, including long-term equipment purchase agreements and lease commitments. This was more than four times higher than a year earlier, the news report said.

 

Often described as "hidden debt", these commitments are expected to turn into physical assets over time. Alphabet's off-balance-sheet obligations increased ninefold over the past year, while Meta's rose eightfold.

 

A separate Nikkei Asia study found that the combined hidden debt of Alphabet, Microsoft, Amazon, Meta and Oracle has increased about eightfold over the past four years to nearly $1.65 trillion, exceeding their reported debt of around $1.35 trillion.

 

Among the five companies, Meta has the largest estimated hidden debt at about $420 billion, nearly three times its reported borrowings. Oracle has recorded one of the sharpest increases. Its hidden debt reached around $273.3 billion by the end of May, driven by long-term lease commitments linked to its Stargate AI data centre project with OpenAI.

 

Higher costs could weigh on profits

 

While AI infrastructure is expected to generate future revenue through cloud computing and AI services, it is also increasing operating costs.

 

As more servers and data centres become operational, companies will have to account for higher depreciation expenses because AI hardware typically has a useful life of only about five years.

 

During the April-June quarter, the combined depreciation expense of Amazon, Alphabet, Microsoft and Meta reached $44.5 billion, accounting for nearly one-third of their total operating profit, the news report said.

 

Meta said higher depreciation costs were among the reasons for its first decline in operating profit in three years.

 

Market estimates suggest the four companies' annual depreciation expenses could rise to around $360 billion by 2028, almost double the level expected for 2026.