Big Tech's $700B AI Spending Spree Reshapes Winners and Losers

$700 billion. That's roughly how much Big Tech plans to pour into AI infrastructure this year—more than the entire GDP of Switzerland.

Meta will spend $115-135 billion, Alphabet$175-185 billion, and Amazon a staggering $200 billion on AI-related capital expenditures in 2026. These figures represent near-doubling from last year's already massive investments.

Yet here's the twist: while tech giants throw money at AI infrastructure, traditional software companies are getting crushed.

The Great Software Selloff

Salesforce, CrowdStrike, and Palo Alto Networks all dropped more than 10% this week as investors fear AI tools will displace their enterprise software businesses. The irony is palpable—AI's rise is simultaneously creating winners and losers within the same tech ecosystem.

Meanwhile, the companies building AI's physical backbone are thriving. Broadcom, a key supplier of custom chips to Google and Meta, just got upgraded to a buy rating after falling 20% from its December highs. The semiconductor company's pullback now looks like an opportunity given the spending commitments from its major clients.

Nvidia's latest GPUs will see massive demand, while infrastructure plays like Eaton (electrical equipment), GE Vernova (power turbines), Dover (cooling systems), and Corning (fiber optic cables) all benefit from the data center buildout.

The Employment Paradox

The job market tells a complex story. December job openings hit their lowest level in over five years, while January layoffs reached their highest since 2009. Yet economists expect 70,000 new jobs in January's employment report, with unemployment holding steady at 4.4%.

This reflects AI's dual nature: destroying some roles while creating others. The question isn't whether AI will impact employment, but which workers will adapt and which industries will emerge stronger.

Consumer Staples' Surprising Renaissance

Amid the tech turmoil, an unexpected winner emerged: consumer staples. The sector jumped 13% in 2026, having its best year in decades according to Bank of America. Companies like Procter & Gamble, long dismissed as boring, suddenly look attractive to investors seeking stability.

This shift suggests markets are hedging their AI bets. While everyone talks about revolutionary change, investors are quietly rotating into dependable, dividend-paying companies that sell necessities.

The Infrastructure Reality Check

Behind the AI hype lies a fundamental truth: artificial intelligence requires massive physical infrastructure. Data centers need power, cooling, networking, and specialized chips. The companies providing these unsexy but essential components may capture more value than the AI software itself.

It's reminiscent of the California Gold Rush—the real money often went to those selling picks and shovels, not the prospectors.

What This Means for Investors

The current market dynamic creates several investment themes. First, the divergence between AI infrastructure and AI software suggests different risk-reward profiles. Infrastructure plays offer more predictable revenue streams, while software companies face existential questions about their future relevance.

Second, the rotation into consumer staples signals that even in an AI-driven world, investors value companies with steady cash flows and defensive characteristics.

Finally, the employment data suggests we're in a transition period where AI's job displacement effects are becoming visible before its job creation benefits fully materialize.