a16z: AI buildout passes railroads as share of GDP, hyperscaler capex hits $780B and heads to $1T
a16z · x · 2026-10-01
a16z partners David George and Alex Immerman frame today's AI buildout as the next chapter of "Software Is Eating the World."
Key points:
- High-tech equipment, software, and R&D now make up 55% of US capital spending; the AI buildout has just surpassed railroads as a share of GDP.
- The five largest hyperscalers will spend $780B on capex this year, heading past $1T by 2027, with demand still outstripping supply across the chain.
- On markets: stocks are up 20% while multiples are down 20%; the S&P trades under 20x earnings, and the market is up 90% since ChatGPT on 15% earnings growth — an earnings story, not just valuation expansion.
- They expect cumulative figures could be 20x higher in 5-10 years, arguing AI democratizes the ability to build software that only a small fraction of people could create before.
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