Microsoft and Meta Show Big Tech Is Eating the Markets, the Economy, and the World

Microsoft’s blowout earnings underscore the increasing dominance of Big Tech on the global economy. (Jason Redmond / AFP via Getty Images)

Microsoft’s market capitalization climbed past the $4 trillion mark on Thursday morning following a spectacular set of quarterly earnings that underscored the company’s dominance in the artificial intelligence landscape. It highlights big tech’s growing influence on markets and the economy.

With its stake in OpenAI, the creator of ChatGPT; the undisputed leadership of its operating system in global business; and its fast-accelerating cloud-computing division, Microsoft is evolving into the world’s most important company.

The group generated $76.4 billion of revenue in the June quarter, the final three months of its fiscal year, taking the annual tally to $282 billion. Wall Street sees that figure rising to $320 billion over the next 12 months, just shy of the gross domestic product of Chile.

The collective annual revenue of the top six tech stocks is likely to reach $2 trillion this year, a figure that is equivalent to the GDP of Russia, the world’s 11th largest economy.

Microsoft is putting that tide of cash to work. It said it plans to boost its capital spending, the vast bulk of which will be dedicated to building AI data centers, to around $120 billion in the current fiscal year. That seems enormous until you consider that Microsoft already has a backlog of $368 billion in bookings across is entire cloud division.

“We are still seeing demand improving,” finance chief Amy Hood told investors on a conference call Wednesday night.

“So I am not as focused on trying to pick a date at which revenue growth and capex growth will meet and cross,” she said. “I’m focused on building backlog, building business and delivering capacity.”

Meta Platforms, the parent of Facebook and Instagram, also posted a blockbuster set of quarterly earnings, telling investors that “we really believe that this is a time for us to really make investments in the future of AI.”

The group will spend as much as $72 billion this year alone, with “another year of similarly significant capex dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our AI efforts and business operations.”

Last week, Alphabet, Google’s parent, pegged its 2025 capex at around $85 billion. Analysts expect Amazon.com , another member of the Magnificent Seven, to outline plans for $100 billion in capital spending when it publishes second-quarter earnings after the close of trading.

All those spending plans imply enormous growth over the next several years, and investors are well aware of that. Microsoft, along with Nvidia, Apple, Meta, Google, and Amazon, now comprise around 35% of the S&P 500 ’s total market value in early trading.

Based on the stock’s move in early trading, the company’s market value increased by around $330 billion, a figure that is higher than the total value of 475 stocks on the benchmark, including Chevron, Coca-Cola, and Advanced Micro Devices .

Even unlisted companies are getting in on the act. Anthropic, the AI start-up that built the Claude chatbot last year, is close to a $5 billion funding round that will value the group at $170 billion, according to Bloomberg. That would match the market value of Boeing, which was founded in 1916.

Data from Sherwood, a tech and business website, pegs the value of the top 10 AI start-ups at around $512 billion. Netflix closed Wednesday’s trading with a market value of $503 billion.

All that is creating significant economic effects. Economists at Renaissance Macro Research, in fact, suggest the collective spending on AI buildouts this year, which they define as “information processing equipment plus software” has added more to U.S. GDP growth than consumer spending.

That is a staggering consideration given that the world’s biggest economy is powered by consumers, which help drive more than two-thirds of its annual growth.

Big tech spending on AI will also flow into construction, energy, transportation, and boost overall employment. A recent report from McKinsey, in fact pegged the collective outlay needed to meet AI demand over the next five years at around $7 trillion by 2030. That would equate to around 21% of U.S. GDP if the economy grows at an annual rate of 1.8%.

It would also be around three times the capital spending used in the railroad boom of the late 1880s, compared with the size of the economy at the time, based on data from investor and engineer Paul Kedrosky.

And that money isn’t coming from government, so it isn’t adding to the U.S.’s already bloated debt and deficit levels. The national debt is forecast to hit $50 trillion by 2034.

No one knows what will matter by then, but the odds are significant that tech will be high on the list.

“There’s a very high chance the world is going to look pretty different in a few years from now,” Meta CEO Mark Zuckerberg told investors. “We’re continually observing how this works and what the pace of AI progress has been. I think it continues to be on the faster end.”

Write to Martin Baccardax at martin.baccardax@barrons.com