The Capex Ledger

Microsoft, Alphabet, Amazon, Meta, and Oracle spent about $150 billion on property and equipment in fiscal 2023. Their guidance for 2026, taken at the midpoint of each range, adds up to about $802 billion.¹ That's the buildout in one line. The rest of this piece is about what the line hides: who's actually paying for the equipment, and how long the buyers are assuming it will last.

Two things are worth knowing before the chart. First, the guidance keeps moving up, and the reasons are mundane. Alphabet raised its range three times between February and July.³ Amazon went from roughly $200 billion to roughly $220 billion in a single quarter and told analysts the difference was memory prices, not new projects.⁵ Second, a capex figure is a cash number, which makes it easy to compare across companies and easy to misread. The last section is about the misreading.

The number

What it's compared to

The comparisons people reach for are the Interstate Highway System, Apollo, and the telecom buildout of 1999 to 2001. All three are smaller than a single year of this program, and it's worth being precise about how much smaller, because the comparison usually gets made to sound a warning rather than to measure anything.

The Interstate system cost about $516 billion in 2024 dollars, spread over 36 years.¹⁵ Apollo cost about $309 billion in 2025 dollars over 13.¹⁴ The five companies spent more than Apollo in fiscal 2025 and will spend more than the Interstate system in 2026. Peak-year telecom capex in 2000, the comparison most often used to call this a bubble, was around 1% of GDP at the time.¹⁶ The 2026 guidance is 2.6% of 2025 US GDP of $30.8 trillion, and Goldman Sachs puts total US AI capex, once you add power, land, and everyone outside the big five, at 1.8% of GDP this year, heading to 2.8% by 2028.¹¹²⁹

The comparison that actually helps is a contemporary one. Every semiconductor sold in the world in 2025 came to $792 billion.¹³ Five-company capex guidance for 2026 is the same size as the entire global chip market of the year before. And all US business capital spending, what the BEA calls private nonresidential fixed investment, was $4.25 trillion in 2025.¹² If the 2026 guidance were spent entirely in the United States, which it won't be, it would be a fifth of that.

Where the money comes from

Until 2025 the five could pay for this out of operations. Epoch AI reconstructed their cash flow statements and found capex growing about 70% a year since mid-2023 against operating cash flow growing about 23%. On that trajectory the two lines cross in the third quarter of 2026, at roughly $186 billion a quarter each. Oracle crossed first. Amazon crossed this summer, and its second-quarter free cash flow came in at negative $7.6 billion against positive $18.2 billion a year earlier.²¹⁵

The financing arrived on schedule. Alphabet raised $84.75 billion of equity in June, the largest equity raise in US corporate history: $30 billion of common and mandatory convertible preferred, a $10 billion private placement anchored by Berkshire Hathaway, and a $40 billion at-the-market program.⁴ Oracle sold a $25 billion eight-part bond in February that drew over $129 billion of orders, set up a $20 billion at-the-market equity program alongside it, and plans another $40 billion of debt and equity in fiscal 2027 against about $70 billion of net capex.¹⁰ Amazon sold $25 billion of bonds in July and told its underwriters it wouldn't be back in 2026.²⁷ Meta's July deal is the one to read twice: $12.5 billion of debt for the El Paso data center, issued by a holding company that BlackRock owns 80% of and Meta owns 20% of, priced at a 7.53% yield. Meta's own second-quarter free cash flow was $784 million on $31 billion of capex.²⁶⁷

Three things in that list matter more than the totals. Buyers showed up, and the order books ran at multiples of the deal size every time. The price is moving: 7.53% for data-center paper adjacent to an investment-grade name is a different cost of capital from the one these companies have operated with for a decade. And the structures are moving off balance sheet. That last point is where the useful-life question stops being an accounting footnote.

The depreciation schedule

Capital expenditure is a cash number. Depreciation is a judgment about how many years the thing you bought will earn. Those two facts explain most of what happened to 2026 earnings.

Amazon shortened the useful life of a subset of its servers from six years to five effective January 2025, citing how fast AI hardware is turning over. That added $1.4 billion of depreciation and took $1.0 billion off 2025 net income, mostly in AWS.²³ Meta went the other direction in the same month, raising certain server and network lives to 5.5 years, which cut 2025 depreciation by about $2.9 billion.²⁵ Oracle extended servers from five to six years in fiscal 2025, worth $573 million of net income, or $0.20 a share.²⁴ Same equipment, same year, opposite judgments, and each one is defensible on its own terms.

The largest change is Microsoft's, and it's the reason the headline capex number moved. On the July 29 call, the company extended the useful life of its data centers and office buildings from 15 to 25 years, and said that more of its future data center leases would be structured as operating leases rather than finance leases. That second part matters more than it sounds: finance leases count in reported capex and operating leases don't. Fiscal 2027 capex guidance fell from about $190 billion to about $175 billion as a result, with, in the CFO's words, no change to the underlying investment.²

The spending is being justified by demand, and the demand numbers are big. Microsoft last disclosed an AI revenue run-rate of $37 billion, growing 123% a year, in April. It didn't update the figure in July; it reported instead that Azure had passed $100 billion of annual revenue and that Microsoft 365 Copilot had passed 30 million paid seats.¹⁸¹ OpenAI's annualized revenue was reported above $40 billion in August.¹⁹ Anthropic's was reported above $65 billion at the end of July, from $9 billion at the end of 2025.²⁰ Nvidia's data-center segment, which is the supplier's-side mirror of all of this, booked $277.7 billion over the four quarters to July and guided the next quarter to $108 billion in total revenue.¹⁷

So the three most-cited AI revenue run-rates add up to roughly $140 billion, and the equipment being bought to serve them costs roughly $800 billion this year and, on sell-side consensus, about $1 trillion next year.²⁸ Whether that ratio is a problem depends entirely on two numbers nobody puts in a headline: how many years the equipment earns, and what it earns per year. Both of those are the depreciation question again. Amazon's chief executive said in July that even at $220 billion the company won't have enough capacity to meet demand this year or next.⁵ That's a statement about the order book, and it's the right thing to hear it as.

When the next round of guidance comes in October, the capex number will get the headline. Read the footnotes instead. Look for a change in useful lives, in either direction. Look for the phrase "operating lease" anywhere near "data center." And look for the share of the quarter's capex that was short-lived assets, the GPUs and CPUs, versus buildings, because that split is the one that decides how much of this year's spending is still earning in 2030.

@misc{wisniewski2026capex,
  author = {Wisniewski, Kyle},
  title  = {The Capex Ledger},
  year   = {2026},
  month  = {sep},
  url    = {https://www.kylewisniewski.com/institutional-ai/analysis/capex-ledger}
}