Wall Street analysts now project total AI capital expenditures will exceed $1 trillion in 2027, following the latest earnings calls from major cloud providers. Evercore and Bank of America both revised their 2027 estimates upward, with 2026 projections landing between $800 billion and $900 billion.
Jefferies analysts noted Thursday that “capex continues to soar as demand outpaces supply and pricing increases.” Bank of America’s tally shows 2025 spending climbing across the board: Alphabet up 4% to $185 billion, Amazon up 1% to $200 billion, Meta up 8% to $135 billion, and Microsoft up 24% to $190 billion.
The spending reflects CEO confidence in monetization. Amazon’s Andy Jassy cited “confidence in the long term capex investments,” projecting $200 billion in buildout this year. Alphabet’s first-quarter cloud revenue jumped 63% year-over-year, driving a 10% stock bump. CFO Anat Ashkenazi said the company is increasing capex to meet “robust demand.”
Jefferies analysts see clear ROI signals: a ~$2 trillion backlog and accelerating cloud growth, with margin leverage holding despite AI investments. BMO Capital Markets' Brian Pitz highlighted Google’s backlog nearly doubling quarter-over-quarter, up 400% annually to $462 billion, with over 50% expected to convert to revenue within 24 months.
Meta faced investor skepticism, with shares down 8% after announcing 2026 capex of $125–145 billion, double 2025’s $72 billion. Mark Zuckerberg attributed the increase to higher component costs, particularly memory pricing. Meta’s free cash flow dropped to $1.2 billion in Q1 from $26 billion a year earlier, though Bank of America expects improvements in 2026.
The sustained capex benefits chipmakers and gear providers. Intel posted strong Q1 earnings as AI buildout drives demand beyond GPUs. Evercore highlighted custom ASIC programs (TPU, Trainium, Maia, MTIA) and an “acute focus on agentic-AI” as catalysts for a CPU renaissance. RBC Capital Markets maintains positive ratings on Nvidia, Micron, Marvell, Astera Labs, Arm, and Lattice Semiconductor, noting that “AI demand is driving double-digit growth in wafer fab.”
Source: CNBC