AI Investment Boom Could Drive Capex to $1 Trillion by 2027
A new report from BofA Global Research indicates that aggressive investment in artificial intelligence could push global hyperscale capital expenditure (capex) to $1 trillion by 2027.
According to analysts, major U.S. tech companies are rapidly increasing their spending forecasts as AI-driven revenues accelerate. At the same time, supply constraints in high-end computing hardware are expected to persist through 2026, further driving investment.
Big Tech Ramps Up Spending on AI Infrastructure
The revised outlook follows strong first-quarter earnings from leading hyperscalers, including Alphabet Inc., Microsoft, Amazon, and Meta Platforms.
BofA now expects combined hyperscale capex to exceed $800 billion in 2026, representing a 67% year-over-year increase, before surpassing the $1 trillion mark in 2027.
AI Revenue Growth Fuels Massive Investment
The surge in spending is being supported by rapidly expanding AI-related revenues across major cloud providers.
Alphabet is now generating more than 16 billion Gemini tokens per minute, while its core search business has grown 19%, driven by AI-powered queries.
Meanwhile, Microsoft reported an annualized AI revenue run rate exceeding $37 billion—an impressive 123% increase compared to the previous year. Amazon’s AWS division has also posted its fastest growth in over three years, rising 28% due to AI workloads and strategic partnerships.
Capex Forecasts Raised Across the Board
To meet growing demand, major tech firms have significantly increased their capital expenditure guidance for 2026.
Microsoft raised its projected capex to $190 billion, well above prior expectations of $154 billion. Amazon maintained a strong outlook of $200 billion, while Alphabet and Meta increased their forecasts to $185 billion and $135 billion, respectively.
Rising Hardware Costs Add to Spending Pressure
A major factor behind the rising capex is the increasing cost of hardware components. The report highlights that hyperscalers are absorbing these higher costs as they scale AI infrastructure.
Microsoft alone attributed $25 billion of its 2026 capex increase to rising component prices, including semiconductors, memory, and related materials.
This environment has strengthened the pricing power of chipmakers, allowing them to pass on higher costs to customers.
Semiconductor Giants and Suppliers Set to Benefit
The ongoing AI investment cycle is expected to benefit key players across the semiconductor ecosystem, including Nvidia.
Companies specializing in memory, optics, semiconductor equipment, and power chips are also positioned to gain from the rapid expansion of data center infrastructure.
AI Compute Supply to Remain Tight
The report notes that hyperscalers are investing equally in merchant GPUs and custom silicon solutions to meet demand.
Despite these efforts, supply constraints in AI computing are expected to continue through 2026. Strong enterprise demand and improving cash flow among tech giants are likely to sustain these historically high levels of investment.
