Google CEO Sundar Pichai during a meeting with French President Emmanuel Macron on the sidelines of the AI Impact Summit in New Delhi on February 19, 2026.
Ludovic Marin | AFP | getty images
Wall Street analysts estimate that total AI capital spending could now climb above $1 trillion in 2027, following big spending plans unveiled by hyperscalers during Wednesday’s tech earnings call.
Evercore and Bank of America both put 2027 capital spending at more than $1 trillion after earnings calls, with 2026 estimates rising to between $800 and $900 billion.
“Cap-Ex continues to rise as demand continues to exceed supply and pricing increases,” Jefferies analysts said in a note to investors on Thursday.
This year’s spending estimates were up across the board, including Google parent alphabet up 4% to $185 billion, Amazon 1% to $200 billion, meta increased by 8% to $135 billion, and Microsoft It rose 24% to $190 billion, according to Bank of America data.
Tech CEOs are expressing confidence about their artificial intelligence investments as evidence of monetization, such as increased cloud revenue, flows through the latest earnings reports, but increased spending is still raising skepticism among investors.
Amazon CEO Andy Jassy said the company is “confident in the long-term capital spending we’re doing,” estimating construction at $200 billion for the year.
Cloud revenue for Alphabet surged 63% in the first quarter this year, sending its stock up nearly 10%. CFO Anat Ashkenazi said Wednesday that capital spending plans were ramping up to meet “strong demand.”
Investors looking for returns
The total cost of an AI buildout is head-spinning, but analysts say they are seeing flows from investment to revenue as valuations and market capitalization rise.
“Cap-Ex continues to climb, but (return on investment) ROI is evident through the ~$2 trillion backlog and faster cloud growth,” Jefferies analysts said. “Margin leverage remains high for hyperscalers despite AI investments, highlighting structural (operating expense, or) OPEX discipline.”
Confidence in monetization is particularly high for Alphabet where backlog growth is reducing computing inventory and expansion.
“Backlog supports Cap-X super-cycle,” Brian Pietz wrote for BMO Capital Markets on Thursday. “Google’s backlog nearly doubled quarter-over-quarter to $462B, a 400% year-over-year increase.”
“The majority of the backlog is for core Google Cloud Platform contracts… and Google expects to recognize more than 50% of this as revenue over the next 24 months,” he said.
While Google’s cloud revenue impressed analysts, Meta The expansion plans irked investors, who wanted to see higher returns for their investments. Shares were recently down about 8%.
“Meta will likely remain in the penalty box pending clear capex ROI,” Jefferies analysts wrote in a Thursday note.
The company spent $72 billion on capital expenditures in 2025, and expects to double that to between $125 billion and $145 billion in 2026. This is higher than the prior range of $115 billion to $135 billion.
“We are raising our infrastructure capital spending forecast for this year,” Meta CEO Mark Zuckerberg said Wednesday. “Much of this is due to higher component costs, particularly memory pricing. But every indication we are seeing in our work and across the industry gives us confidence in this investment.”
Meta’s free cash flow has been declining, falling to just $1.2 billion in the first quarter from $26 billion in the same period last year.
Bank of America analysts said they expect sales and free cash flow to improve across the region in 2026, which will help support spending.
Who benefits?
Continued capex growth is good news for chip makers and gear providers. They are customers of hyperscalers, and analysts were paying attention Thursday. CPU-maker’s first-quarter earnings intel were particularly strong because AI buildouts require much more than just graphics processing units or GPUs.
According to Evercore analysts, “there is strong and growing demand for various custom (application-specific integrated circuit) programs (TPU, Trainium, Maia, and MTIA),” which have led to an “intense focus on agentic-AI as a key use-case, which we believe will prove to drive a CPU renaissance over the next several years.”
RBC Capital Markets maintains positive rating NVIDIA, micron technology, marvel, Astera Labs, arm holdingsAnd lattice semiconductor.
“Strong capex trends should also bode well for sector-perform rated AVGO, AMD, SNDK and INTC,” RBC said. “AI demand driving double-digit growth in wafer fabs.”
