Tech giants like Microsoft, Amazon, and Meta planned to spend a staggering $635 billion on AI this year. They wanted to build massive data centers and buy the latest chips to keep the artificial intelligence boom alive. This budget is a huge increase from the $383 billion they spent last year and far more than the $80 billion they spent back in 2019. But now, a major crisis in the Middle East is putting those plans at risk.
The ongoing war involving Iran has pushed oil and energy prices much higher. Since AI data centers require a massive amount of electricity to run, these rising costs are becoming a serious problem. Experts at S&P Global warned this week that tech companies might have to scale back their spending if energy prices stay high through the first half of the year.
If these companies stop spending so much money on infrastructure, the stock market could see a “meaningful correction.” For most of 2025, investors were incredibly excited about AI, and that hype pushed stock indexes to record highs. However, that momentum has slowed down significantly since the conflict began. People are starting to worry that the growth they once expected won’t actually happen.
Melissa Otto, a top researcher at S&P, says that if Big Tech pulls back on its investments, it could trigger a market-wide drop. She noted that many investors haven’t fully realized how much high energy prices will hurt company earnings. If energy costs jump by 30%, it won’t just affect data centers; it will hurt everyday consumers and businesses across the globe.
Oil executives at a recent energy conference in Houston echoed these concerns. They warned that the market hasn’t fully accounted for the risks to the global oil supply. This uncertainty makes it hard for tech companies to plan for the long term. While no one has officially cut their budget yet, the pressure is clearly building.
The situation creates a big question mark around global economic growth. Tech companies are currently in a tough spot: they need to spend billions to stay competitive in the AI race, but the cost of power is making that harder every day. If the bill for electricity gets too high, the AI revolution might have to slow down.
