Bridgewater Sees Big Tech Pouring $650 Billion Into AI in 2026

AI Capex Surge and Economic Impact

Feb 23 (Reuters) - U.S. technology giants Alphabet, Amazon, Meta and Microsoft are expected to collectively invest about $650 billion to scale up AI-related infrastructure this year, according to an analysis by Bridgewater Associates.

The investments would mark a sharp increase from $410 billion in 2025.

Bridgewater’s Risk Warning

In a letter to clients, Bridgewater co-chief investment officer Greg Jensen said the artificial intelligence boom has entered a "more dangerous phase," marked by exponentially rising investments in physical infrastructure and growing reliance on outside capital.

Compute Demand vs. Supply

"Compute demand continues to significantly outpace supply, driving hyperscalers to invest even more rapidly to try to someday get ahead of the demand."

Buybacks Redirected to Capex

The four companies have already curbed share buybacks more aggressively to help fund the surge in capital expenditure, Jensen said.

The scale of spending, he said, is creating significant downside risks if anything went wrong.

IPO Funding for AI Labs

Anthropic and OpenAI will need major product breakthroughs to secure backing for massive final fundraisings ahead of potential IPOs, he said. Without a credible path to outsized profits, they could struggle to justify lofty valuations and heavy capital demands.

Pressure on Software Sector

Besides, these products are exposing significant risks to other sectors such as software companies and data providers, he said, pointing to the recent selloff in software stocks.

"It is no longer possible for AI leaders to satisfy their investors' expectations without creating existential risks to other sectors like software," Jensen added.

GDP and Inflation Effects

Beyond stock markets, Jensen said tech investment spending remains a significant "upward pressure for U.S. growth."

Bridgewater estimates tech investment added about 50 basis points to U.S. GDP growth in 2025 and could provide around 100 basis points of support this year.

However, the spending boom may also lift inflation in technology and communications equipment and push up electricity prices in some regions.

Dot‑Com Comparison and Market Risks

A severe stock market correction could undermine growth and limit companies' ability to raise capital, similar to the Dot-com bubble in 2000, Jensen said, but added that recent moves are far smaller.

Reporting and Editing Credits

(Reporting by Prakhar Srivastava in Bengaluru and Anirban Sen in New York; Editing by Leroy Leo)