Morgan Stanley projects that capital expenditures for hyperscale companies such Amazon (AMZN, Financial), Alphabet (GOOG, GOOGL), Microsoft (MSFT, Financial), and Meta Platforms (Meta) will skyrocket to $300 billion in 2025. Reflecting a major long-term opportunity, the expenditure increase shows rising investment to support developments in generative artificial intelligence (AI) and massive language models.
While Google and Meta intend to invest $62.6 billion and $52.3 billion, respectively, Amazon and Microsoft are expected to lead in capex, devoting $96.4 billion and $89.9 billion, respectively. The strategic expansion of these companies depends mostly on AI-driven innovation; Google wants to increase income by improving Search, YouTube, and other products. "AI-driven platform-level innovation...improves confidence in long-term growth," Brian Nowak, of Morgan Stanley said.
While Microsoft is growing its cloud and AI offerings driven by business demand, Meta is streamlining operations for efficiency and increasing engagement on its platforms. With high-margin areas, likely to outpace capex spending, Amazon gains from aggressive investment in its cloud and eCommerce operations, Nowak said, stressing Amazon's "multi-decade secular growth."
