The four major cloud giants have collectively increased their capital expenditures. Why are these giants so bold in pouring money into this?

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The four major US hyperscale cloud computing giants have collectively raised their capital expenditure forecasts in the latest fiscal quarter, as the wave of AI infrastructure investment is advancing toward a trillion-dollar scale at an astonishing speed.

According to ZF Trading Desk, Bank of America Securities released a report on April 29 stating that Google, Microsoft, Amazon’s AWS, and Meta all raised their capital expenditure outlooks for fiscal year 2026 and even 2027 in their Q1 2026 financial reports. BofA now expects global hyperscale cloud computing providers’ capital expenditure in 2026 to exceed $800 billion, up 67% year-on-year; in 2027, it may break the $1 trillion mark, increasing by another 25%.

This round of spending expansion is backed by the rapid monetization of AI business and sustained explosive customer demand. Each giant has pointed out that accelerated growth in AI sales revenue and continued realization of return on investment are the core logical drivers for increasing investment in infrastructure. Meanwhile, supply of computing power will remain unable to meet demand throughout 2026, further intensifying the giants’ urgency to expand production capacity. For the semiconductor industry, this means that AI chip suppliers such as Nvidia, as well as segments like storage, semiconductor equipment, power semiconductors, and optical devices, will continue to benefit from this super cycle of capital expenditure.

AI Monetization Accelerates, Giants Invest with Confidence

The cloud giants’ capital expenditure increases are not blind expansion, but backed by real business data.

For Google, the number of tokens generated per minute via direct Gemini API calls has exceeded 16 billion, a 60% increase quarter-on-quarter; paid monthly active users of Gemini Enterprise Edition grew 40% quarter-on-quarter, becoming a major growth driver for Google Cloud in Q1; Google Search business growth rate reached 19%, the fastest in recent years, with AI-driven search queries being a key factor.

For Microsoft, annualized run rate for AI-related sales has surpassed $37 billion, up 123% year-on-year; management projects that despite ongoing supply constraints, Azure cloud services will see moderate acceleration in the second half of 2026.

Amazon AWS Q1 sales grew 28% year-on-year to $37.6 billion, the fastest segment growth in over three years. The company believes demand is driven both by AWS workloads and Bedrock partnerships with agencies such as OpenAI and Anthropic.

Comprehensive Capital Expenditure Upgrades by the Four Giants

From specific figures, the four giants’ capital expenditure size for 2026 is significantly higher than previous market expectations.

Google’s Q1 capital expenditure was $35.7 billion, in line with expectations, but the annual guidance was raised to about $185 billion, higher than the previous $175 billion, and the company hinted at a “substantial increase” in 2027.

Microsoft’s Q1 capital expenditure was slightly below expectations, mainly due to quarterly rhythm, but annual guidance was raised to $190 billion, up 61% year-on-year, far exceeding previous market expectation of about $154 billion.

Amazon’s Q1 capital expenditure slightly exceeded expectations, maintaining a strong annual guidance of over $200 billion, up more than 50% year-on-year.

Meta’s Q1 capital expenditure was below expectations, also affected by quarterly rhythm, but the annual guidance midpoint was raised to $135 billion, higher than the previous $125 billion.

Overall, BofA raised its forecast for global hyperscale cloud provider capital expenditure in 2026 to over $804 billion, about 7% higher than the previous estimate of $750 billion, and expects 2027 to further move toward $1 trillion.

Cost Increases Incorporated into Budgets, Semiconductor Supplier Pricing Power Highlighted

Notably, while raising capital expenditure, each giant has explicitly indicated that rising raw material costs have been incorporated into their budgets—this statement is significant for the semiconductor supply chain.

Microsoft clearly stated that its $190 billion 2026 capital expenditure guidance includes about $25 billion in incremental component price increases, accounting for about 70% of the increase relative to previous market expectations ($154 billion). The areas of cost increase include critical raw materials such as storage, wafers, and substrates.

BofA believes this signal means that AI semiconductor suppliers' pricing power and profit margins will generally remain firm, as major computing power and network equipment manufacturers are able to pass on cost increases to downstream customers.

Limited Computing Power Supply, Heterogeneous Deployment as Mainstream

BofA’s report highlights that computing power supply will remain in shortfall throughout 2026, which is one important reason hyperscale cloud providers are continually increasing capital expenditure.

In terms of chip deployment strategy, the report notes that most hyperscale cloud providers are equally emphasizing heterogeneous mixed deployment of commercial GPUs and self-developed custom chips, rather than relying on a single type of computing solution. This trend means that commercial GPU suppliers such as Nvidia, and self-developed chip projects by the cloud giants, will develop in parallel to meet huge computing power demand.

BofA categorizes the main beneficiaries in the AI semiconductor space into five types: computing power (represented by Nvidia), storage, semiconductor equipment, power semiconductors, and optical devices.

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