The latest chart from Morgan Stanley, based on data from the Congressional Budget Office (CBO), shows that by 2027, the AI capital expenditure of the five major tech giants as a share of GDP will surpass U.S. defense spending for the first time.


In 2025, Alphabet, Amazon, Meta, Microsoft, and Oracle's AI capital expenditure accounts for approximately 1.45% of GDP, far below the 2.85% for defense spending.
In 2026, the gap narrows significantly, with AI capital expenditure estimated at about 2.45% of GDP, compared to roughly 2.6% for defense.
In 2027, AI capital expenditure is projected to jump to around 3.25%, while defense spending remains at about 2.6%.
Former Google CEO Eric Schmidt has warned that future conflicts will be radically different from familiar wars, with battlefields dominated by algorithms and autonomous systems becoming more important than aircraft carriers and missiles.
If this assessment holds true, the capital expenditure data in this chart effectively represents a "parallel defense budget" operated by five companies, decided by boards rather than Congress.
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