The a16z Show · Sep 30, 2026 · 54m · 33m saved
With David George, General Partner at Andreessen Horowitz, who leads its Growth practice · Sarah Wang, General Partner at Andreessen Horowitz · Alex Immerman, General Partner at Andreessen Horowitz · Santiago Rodriguez, Partner at Andreessen Horowitz
Alphabet, Amazon, Meta, Microsoft and Oracle will spend about $780 billion on capital projects in 2026, up from $416 billion in 2025, according to the growth team at Andreessen Horowitz.
A market rally that size usually raises the question of a bubble. The partners said the rally has come from earnings, not from investors paying more for each dollar of profit.
"So stocks are up about 20% while multiples are down about 20%."
David George, the general partner who leads the growth practice at Andreessen Horowitz, on The a16z Show, walked through 25 slides from the firm's annual State of Markets presentation with general partners Sarah Wang and Alex Immerman and partner Santiago Rodriguez. The team backs late-stage private companies, including OpenAI, Databricks, SpaceX and Revolut.
The full episode is covered here so you can skip it. 54 minutes of audio, 21 minutes of reading.
Here are the 16 takeaways that matter.
Key Takeaways
Tech now makes up roughly 55% of US capital spending, and the AI buildout has passed the railroads as a share of GDP
The market's gains have come from earnings, with the S&P 500 trading below 20 times earnings
Hyperscaler capital spending is forecast to pass $1 trillion a year from 2027
Every new forecast for the five biggest spenders has come in higher than the last
Demand for computing power still exceeds supply, with some data center parts unavailable until 2028
Data centers can lower household power bills, because they spread the fixed cost of the grid over more electricity
Enterprise AI is still early: 69% of S&P 500 companies have live deployments, but far fewer can measure the results
The heaviest AI users spend about eight times as much as the next tier
Only about 30% of public software companies are growing 20% a year or more, against almost every private company the team sees
The six most valuable private companies are worth more than a decade of US IPOs combined
Secondary-market discounts to the last funding round have shrunk to about zero
1. Tech Is Most of US Capex
Wang opened by saying the State of Markets deck is a yearly exercise by the growth team, and that this episode covered a subset of its slides. Her first point was that technology now drives investment across the whole economy, from software and AI models to power, construction and factories.
Tech is the majority of US business investment
"So high-tech equipment, software, and R&D now account for roughly 55% of US capital spending, which is just a staggering number." — Sarah Wang
She added that tech is almost 40% of the value of the US stock market, that eight of the world's 10 most valuable companies are US tech companies, and that AI model companies have together raised over $350 billion.
The buildout has passed the railroads
"And just to put it into very deep historical context because this is probably the analogy that we've seen the most of this buildout just surpassed railroads as a percentage of GDP." — Sarah Wang
"We all happen to think that if you fast forward five to seven, maybe 10 years from now we'll be looking at these numbers and they'll probably be 20x higher cumulatively." — Sarah Wang
Immerman compared the moment to Marc Andreessen's line that software is eating the world.
"Yeah, this does feel like the next chapter of Mark's software is eating the world." — Alex Immerman
He said only a small fraction of people could write software over the past 15 years. Now each of the four panelists runs a handful of automated tasks every night, and that new demand for software means more chips, power and construction.
