Key Points:
- Tech giants plan to invest $650 billion in AI infrastructure this year.
- Bridgewater executive Greg Jensen warns the market has entered a “dangerous phase.”
- Companies are cutting share buybacks to fund these massive construction projects.
- AI growth poses an existential threat to traditional software companies.
Four of the world’s largest technology companies are preparing to spend a staggering amount of money on artificial intelligence. An analysis by Bridgewater Associates predicts that Alphabet, Amazon, Meta, and Microsoft will collectively invest about $650 billion this year to build the physical infrastructure needed for AI. This figure represents a massive jump from the $410 billion they spent in 2025.
Greg Jensen, co-chief investment officer at Bridgewater, sent a letter to clients warning that the AI boom has entered a “more dangerous phase.” He noted that investment in servers and data centers is rising exponentially. At the same time, companies are relying more on outside money to keep the lights on. The demand for computing power is growing faster than supply, forcing these tech giants to spend cash rapidly just to catch up.
To pay for this surge, these corporations are changing their financial habits. They have aggressively cut back on share buybacks. Instead of returning cash to shareholders, they are pouring it into capital expenditures. Jensen argues that this scale of spending creates significant risks if the technology fails to deliver expected returns.
The pressure is also mounting on AI startups like Anthropic and OpenAI. Jensen believes they need major product breakthroughs soon. Without new hits, they will struggle to raise the final rounds of funding they need before launching Initial Public Offerings. They must prove they can generate huge profits to justify their sky-high valuations.
This aggressive growth creates winners and losers. Jensen pointed out that AI leaders can only satisfy their investors by creating “existential risks” for other sectors. Traditional software companies are already seeing their stock prices fall as investors worry AI will replace them.
On the bright side, this spending spree fuels the American economy. Bridgewater estimates that tech investment will boost U.S. GDP significantly this year. However, there is a cost. The boom could drive up inflation for tech equipment and increase electricity prices in certain regions. Jensen compared the situation to the Dot-com bubble, warning that a market correction could hurt growth, though he noted current market shifts are smaller than in 2000.
