AI Capital Expenditure by Big Five Tech Giants Set to Surpass U.S. Military Spending for the First Time by 2027
N.R. Finch
Morgan Stanley estimates that AI capital spending by five tech giants will hit $1.1 trillion in 2027 — roughly 3.2% of U.S. GDP — surpassing U.S. defense spending as a share of GDP for the first time in history.
How big is this number?
Morgan Stanley's "Big Five" are Alphabet, Amazon, Meta, Microsoft, and Oracle.
Their combined AI capex is projected to top $800 billion in 2026 (about 2.5% of U.S. GDP) and reach $1.1 trillion in 2027 (about 3.2%).
This means → five private companies alone will spend more on AI, as a share of GDP, than the entire U.S. military budget — already the world's largest.
Why compare it to defense spending?
The Congressional Budget Office projects U.S. defense spending at roughly 2.7% of GDP — a long-tracked benchmark for "nation-scale" outlay.
In 2025, the Big Five's AI spend sits at about 1.5% of GDP — less than half of defense. By 2027, it is expected to hit 3.2%, overtaking defense.
In plain terms = in two years, AI capex goes from "half the Pentagon's budget" to "bigger than the Pentagon's budget." The acceleration itself is the signal — tech firms are betting on AI infrastructure at sovereign scale.
What does this mean for markets?
This reflects a shift: AI infrastructure spending is no longer a strategic choice by a few companies — it is a cross-industry capital cycle.
$1.1 trillion in annual spend means sustained demand pull for upstream links — chips, servers, data centers, power.
This means → for investors, the focus is moving from "who is building AI" to "who is building the road for AI" — infrastructure supply chains are the highest-certainty beneficiaries.
Content is for reference only, not financial advice.