Amazon, Google, Meta, and Microsoft are poised to invest approximately $300 billion in capital expenditures in 2025, with projections showing even higher spending in 2026, according to new estimates from Morgan Stanley. This unprecedented investment wave is primarily focused on AI infrastructure, including data centers, GPUs, servers, and networking equipment needed to support the explosive growth in generative AI and large language models.
The four tech giants, known as hyperscalers due to their massive cloud computing networks, are engaged in what Morgan Stanley describes as a “multiyear investment cycle of epic proportions.” The bank’s analysts emphasized that these rising capital expenditure numbers underscore the critical importance of continued transparency about adoption rates, user engagement, and revenue opportunities these companies are pursuing in the AI space.
Amazon leads the pack with the most significant spending increase. Morgan Stanley raised its 2025 capex estimate for Amazon by 22%, bringing it to $96.4 billion. This surge will be primarily driven by purchases of GPUs and servers for data centers. Looking ahead to 2026, Amazon’s capital expenditures are projected to climb even higher to $105 billion, outpacing its Big Tech rivals. Collectively, the four companies are forecast to invest $336.5 billion in 2026.
The massive spending spree comes on the heels of strong Big Tech earnings reports that revealed enormous demand for AI services. To meet this demand, companies need to dramatically expand their infrastructure capabilities, including more data centers, advanced GPUs, sophisticated networking equipment, and substantial energy resources.
This investment trend aligns with earlier forecasts from Bernstein, which predicted Big Tech capex exceeding $1 trillion over five years. Amazon CEO Andy Jassy reinforced the company’s commitment to aggressive AI investment during recent analyst calls, characterizing generative AI as “a really unusually large, maybe once in a lifetime type of opportunity.” Jassy expressed confidence that Amazon’s track record of generating strong operating income and free cash flow would translate to successful returns on these AI investments, similar to the company’s previous infrastructure buildouts.
Key Quotes
These high and rising capex numbers again speak to the importance of continued disclosure about new/incremental adoption, engagement, and revenue opportunities each of the four companies are seeing and investing in
Morgan Stanley analysts emphasized this point in their Tuesday note, highlighting how the massive spending levels require transparency about the actual business opportunities and returns these companies are pursuing in AI.
We’ve proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business. And we expect the same thing will happen here with generative AI.
Amazon CEO Andy Jassy made this statement to analysts, drawing parallels between the company’s current AI infrastructure investments and its successful track record with previous large-scale capital expenditures, particularly in cloud computing infrastructure.
It is a really unusually large, maybe once in a lifetime type of opportunity.
Jassy used this characterization to describe the generative AI opportunity, justifying Amazon’s aggressive investment stance and signaling to investors that the company views AI infrastructure as a transformational moment comparable to the early days of cloud computing.
Our Take
The staggering scale of Big Tech’s AI infrastructure spending reveals a critical inflection point in the technology industry. What’s particularly noteworthy is Amazon’s 22% increase in projected capex—the largest among the hyperscalers—suggesting the company is playing catch-up after initially trailing competitors like Microsoft in the generative AI race. The collective $300+ billion annual spending represents more than just infrastructure buildout; it’s essentially a high-stakes poker game where sitting out means irrelevance. However, investors should watch carefully for signs of actual revenue generation and adoption metrics that justify these investments. The comparison to previous infrastructure cycles is apt, but generative AI’s monetization path remains less proven than cloud computing was at similar investment stages. The real test will come in 2025-2026 when these companies must demonstrate that this “once in a lifetime opportunity” translates into proportional returns.
Why This Matters
This unprecedented spending surge represents a fundamental shift in how Big Tech views AI infrastructure as a competitive necessity rather than an optional investment. The $300 billion commitment for 2025 alone—with projections climbing to $336.5 billion in 2026—signals that these companies believe generative AI and large language models will fundamentally reshape computing and business operations.
The scale of investment has far-reaching implications across multiple sectors. Hardware manufacturers like NVIDIA stand to benefit enormously from GPU demand, while energy companies and real estate markets near data center hubs will see significant activity. For businesses and consumers, this infrastructure buildout should translate to more powerful, accessible, and diverse AI services.
However, this spending race also raises important questions about market concentration and competitive dynamics. Only the largest tech companies can afford investments at this scale, potentially creating barriers to entry for smaller AI competitors. The “once in a lifetime opportunity” framing from Amazon’s CEO suggests these companies view current AI investments as existential—those who fail to invest adequately risk being left behind in the next era of computing.
Recommended Reading
For those interested in learning more about artificial intelligence, machine learning, and effective AI communication, here are some excellent resources: