US AI investment hits 2% of GDP in 2026, nearing defense spending

US artificial intelligence investment will reach 2% of gross domestic product in 2026, approaching the share allocated to national defense, according to TS Lombard.

US artificial intelligence investment will reach 2% of gross domestic product in 2026, a level that approaches the share the country allocates to national defense and far exceeds every other major economy, according to TS Lombard.

"The US is spending on AI at a scale that has no historical precedent outside wartime mobilization," said Steven Blitz, chief US economist at TS Lombard. "No other country is within striking distance."

The next-highest spenders — Norway and Saudi Arabia — will allocate just 0.7% of their respective GDPs to AI this year, the research firm estimates. China's data center spending as a share of GDP sits at approximately 0.4%, below Malaysia and Sweden, while the Eurozone allocates roughly 0.2% and Canada trails at approximately 0.15%.

The 2% figure underscores a widening gap between the US and the rest of the world in AI infrastructure buildout. Amazon alone plans roughly $200 billion in capital expenditures in 2026, the largest single-year corporate spending plan among big technology companies, with the bulk earmarked for Amazon Web Services. AWS revenue rose 28% year over year in the first quarter to $37.6 billion, its fastest growth in 15 quarters, and its committed customer backlog reached $364 billion.

Who Wins, Who Loses

The spending concentration creates a self-reinforcing cycle for US cloud providers and chipmakers. Amazon's custom silicon business — Trainium and Graviton processors plus Nitro networking chips — topped a $20 billion annual revenue run rate in the first quarter, growing at a triple-digit rate year over year. CEO Andy Jassy said the operation is now "one of the top three data center chip businesses in the world."

Nvidia remains the dominant beneficiary of AI infrastructure spending, though its grip is being tested. Amazon's Trainium2 offers about 30% better price-performance than comparable graphics processing units and is largely sold out, while Trainium3 began shipping early this year. Broadcom's recent fiscal second-quarter revenue miss triggered a 12% sell-off and a broader rotation out of semiconductor names, with the VanEck Semiconductor ETF losing more than 1% and Micron Technology falling close to 8%.

The Risk in the Numbers

The spending binge carries significant financial risk. Amazon's free cash flow fell to $1.2 billion over the trailing 12 months from $25.9 billion a year earlier, even as operating cash flow rose 30% to $148.5 billion. If demand for AI capacity cools before data centers and chips earn their keep, the strong returns management expects could fail to materialize.

For investors, the 2% GDP figure signals that AI infrastructure spending has entered a phase where execution matters more than narrative. Amazon trades at roughly 32 times earnings, a premium that reflects the market's confidence in its AI buildout but leaves little room for error. The companies that can convert capital spending into revenue growth — and eventually free cash flow — will separate from those that cannot.

This article is for informational purposes only and does not constitute investment advice.