Citigroup expects Alphabet, Meta Platforms, and Amazon to spend a combined $801 billion on capital expenditure in 2027 as the world’s largest technology companies accelerate their artificial intelligence infrastructure investments.
The bank warned that the scale of this spending could push all three companies into negative free cash flow during both 2027 and 2028.
Citi Raises Big Tech Capital Spending Forecasts
Ahead of the second-quarter 2026 earnings season, Citi significantly increased its capital expenditure estimates for Alphabet, Meta, and Amazon.
The bank also expects all three companies to exceed analyst forecasts for both revenue and earnings during the quarter.
Citi said the higher spending estimates would result in negative free cash flow for each company in 2027 and 2028.
Alphabet Capex Forecast Reaches $308 Billion
Citi raised its 2027 capital expenditure forecast for Alphabet by approximately 21% to $308 billion.
Much of that spending is expected to support artificial intelligence computing capacity, data centres, cloud infrastructure, and custom semiconductor development.
The forecast highlights the enormous financial commitment required for Google to compete in the expanding AI market.
Meta Spending Could Rise to $205 Billion
Meta’s estimated 2027 capital expenditure was increased by around 22% to $205 billion.
The elevated forecast is closely connected to Meta’s goal of developing approximately 14 gigawatts of computing capacity.
That target demonstrates the physical scale of the AI infrastructure race between the largest global technology platforms.
Building that level of capacity will require major investments in data centres, processors, networking equipment, electricity, and supporting infrastructure.
Amazon Capex Seen at $288 Billion
Citi also raised its 2027 Amazon capital expenditure forecast by approximately 12% to $288 billion.
Amazon is expected to continue investing heavily in Amazon Web Services as demand for AI computing and cloud infrastructure grows.
Combined, Alphabet, Meta, and Amazon are now forecast to spend more than $800 billion in a single year.
Negative Free Cash Flow Is a Strategic Choice
Negative free cash flow at companies generating hundreds of billions of dollars in annual revenue would represent a significant change in their financial profiles.
However, Citi does not view the development as evidence of financial distress.
Instead, the bank sees it as a deliberate strategic decision to invest aggressively in AI computing capacity and infrastructure while demand remains strong.
The companies are effectively prioritising future growth and market leadership over near-term cash generation.
Google Cloud Growth Forecast Raised
Citi expects Google Cloud Platform revenue to rise by 68.5% year-on-year during the second quarter of 2026.
The bank also forecasts Google Cloud revenue growth of 93.5% in 2027, taking annual revenue to approximately $190 billion.
For the first time, Citi has included sales of Google’s Tensor Processing Units in its Google Cloud revenue model.
Around $62 billion in TPU revenue is included in the bank’s 2027 forecast.
Google’s AI Chips Become a Major Revenue Stream
The decision to include TPU sales suggests that Citi now considers Google’s custom AI chip business a measurable commercial operation.
Previously, these processors were largely viewed as internal infrastructure used to support Google’s own products and cloud services.
Citi’s revised estimates indicate that custom AI chips could become a substantial independent source of revenue for Alphabet.
AWS Growth Expected to Accelerate
Citi forecasts Amazon Web Services revenue growth of 32.5% year-on-year in the second quarter of 2026.
The bank expects AWS growth of 33.5% for the full year before accelerating to 40% in 2027.
Rising AI adoption and the availability of additional computing capacity are expected to support this expansion.
Citi believes infrastructure spending will remain one of the most important issues for investors as Amazon prepares to report its results.
Advertising and E-Commerce Trends Improve
Beyond cloud computing and AI investment, Citi also sees improving conditions in digital advertising and online retail.
The bank expects stronger advertising and e-commerce trends to support better-than-anticipated revenue and profitability during the second quarter.
These trends could also lead to stronger guidance for the third quarter.
Citi’s outlook is partly based on industry research conducted during the Cannes advertising festival and a separate discussion with an advertising specialist.
The findings suggest that the environment for digital advertising spending has strengthened heading into the summer.
Investors Face a Mixed Big Tech Outlook
The combination of stronger short-term earnings and much higher long-term spending creates a complicated picture for investors.
Optimistic investors may focus on Citi’s expectation that the companies will beat quarterly forecasts and that strong AI demand supports the investment cycle.
More cautious investors may be concerned that three of the world’s most profitable companies could all enter negative free cash flow at the same time.
Such a development would represent a meaningful shift from the cash-generating business models that have traditionally supported Big Tech valuations.
Returns on AI Spending Will Be Closely Watched
Alphabet, Meta, and Amazon are all expected to publish their second-quarter 2026 results in the coming weeks.
Citi believes the headline earnings figures may be relatively easy for investors to evaluate.
The more difficult question will be how quickly each company expects to generate returns from annual capital spending that could reach hundreds of billions of dollars.
Investors are likely to press management teams for greater clarity on AI revenue growth, infrastructure utilisation, future margins, and the timeline for restoring positive free cash flow.
