Alphabet expects to spend $195 billion to $205 billion on AI infrastructure in 2026, and Amazon expects to spend around $220 billion, with the money flowing directly into chipmakers Nvidia and Broadcom and memory makers Micron and Sandisk. Rising memory prices already pushed Amazon to raise its own spending plan once this year.
Alphabet expects to spend between $195 billion and $205 billion on AI infrastructure in 2026, while Amazon expects to spend around $220 billion. Both companies are chasing surging demand for their cloud computing products, and the spending flows directly to Nvidia, Broadcom, Micron, and Sandisk.
Nvidia and Broadcom split the chip demand
Nvidia remains the default supplier because cloud clients see its computing units as the industry standard, but Broadcom offers an alternative. Broadcom has partnered with Alphabet to build the Tensor Processing Unit, a custom AI chip designed specifically for AI workloads. TPUs can lock clients into Alphabet's cloud ecosystem once workloads are configured for them, yet that also means a share of Alphabet's spending flows straight to Broadcom.
Neither company is near its ceiling. Nvidia has told investors it expects AI hyperscaler spending to top $1 trillion next year, and Broadcom expects its custom AI semiconductor division to deliver more than $100 billion in sales. That division had $10.8 billion in the second quarter.
Memory prices force Amazon to spend more
Memory chip prices have surged, and that shift specifically pushed Amazon to raise its 2026 spending plan from $200 billion to $220 billion, likely influencing Alphabet's budget as well. Micron and Sandisk make the memory chips capturing that windfall. In Sandisk's latest quarterly results, the company attributed a third of its revenue growth to higher output and two-thirds to rising prices, a mix caused by AI hyperscaler demand outrunning the memory chip market's capacity.
Input costs for Micron and Sandisk haven't changed, only the price they can charge, so the current conditions flow straight to their bottom lines. Micron's management team expects the shortage to persist into 2028, leaving room for prices to keep climbing.
Source: The Motley Fool
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