While often characterized as a bubble, the surge in AI capital expenditure more closely resembles an avalanche, a forceful, disruptive event set in motion by accumulated technological momentum and hyperscaler ambition.
As of late 2025, the four largest hyperscalers: Microsoft, Amazon, Meta, and Alphabet, are on track to exceed $380 billion in combined capex for the year, with guidance repeatedly revised upward during Q3 earnings. Amazon now projects $125 billion, Alphabet $91-93 billion, Microsoft $94 billion, and Meta $70-72 billion for the 2026 fiscal year. GPU and data center demand continues to outstrip supply, prompting further increases for 2026. While there have been recent concerns about projected capex levels, investors should expect upward revisions to continue for the foreseeable future.
History provides instructive parallels of infrastructure overbuild followed by consolidation and abundance:
- U.S. Railroads (1870s-1890s): Overexpansion triggered severe panics; ~25% of mileage entered bankruptcy. The surviving network later underpinned a century of growth.
- Fiber-Optic Glut (1998-2002): Utilization collapsed to ~2%; dozens of carriers failed. The excess capacity eventually enabled broadband and cloud at a near-zero marginal cost.
- Dotcom Bust (2000-2002): The NASDAQ declined 78%, but the survivors built today’s digital economy.
These episodes delivered pain (compressed margins, project failures, and sharp stock-price corrections) yet proved highly constructive in the longer term. An avalanche serves as a fitting analogy: it destroys weak structures in its path and temporarily buries the landscape, but once the snow settles and melts, it clears away deadwood, deposits nutrient-rich sediments, and irrigates the terrain for renewed growth.
The AI buildout is likely on the same track. Periodic pullbacks and shakeouts will arrive, but the underlying capex cycle will persist. Well-capitalized leaders that can convert today’s heavy investment into durable revenue streams will benefit in the long term, and humanity will enter a materially different future powered by abundant intelligence. Trying to dodge every market tremor rarely pays off. Instead, we continue to advocate global diversification to capture upside, combined with disciplined asset allocation that avoids putting all your eggs in one country or basket that could get buried when the snow slides.
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