Tech giants are spending $660 billion a year on AI—this either leads to a massive economic boom or a total bankruptcy crisis.
March 26, 2026
Original Paper
What Investment Data Implies about the AI Transition 
SSRN · 6465519
The Takeaway
Economists modeled the massive jump in capital expenditure by firms like Microsoft and Google, finding that it requires AI to deliver a 7% to 40% boost to the entire global economy by 2030 just to be profitable. If the productivity boom fails to materialize, the five largest U.S. firms face potential bankruptcy.
From the abstract
The five largest U.S. technology firms spent $400 billion on capital expenditure in 2025 and are forecast to spend $660 billion in 2026-an increase of over 50%. These firms face bankruptcy unless expected profits grow commensurately. We embed this observation in a two-sector open-economy model with rare productivity booms. We calibrate the boom size to the observed increase in investment that has occurred and is projected to continue through 2027, implying that each boom raises AI-sector product