The Four Cloud Giants Collectively Raise Capex: Why Are They Daring to Spend So Aggressively?

The four major U.S. hyperscale cloud computing giants collectively raised their capital expenditure expectations in the latest fiscal quarter, as the wave of AI infrastructure investment advances at an astonishing pace toward the trillion-dollar mark.

According to Zhuifeng Trading Desk, a report released by Bank of America Securities on April 29 pointed out that Google, Microsoft, Amazon's AWS, and Meta all raised their capital expenditure outlooks for fiscal year 2026 and even fiscal year 2027 in their Q1 2026 earnings reports. Bank of America now expects global hyperscale cloud providers' capex to exceed $800 billion in 2026, a year-on-year increase of 67%; in 2027, it is expected to break through $1 trillion, representing another increase of approximately 25%.

The confidence behind this round of spending expansion comes from the rapid monetization of AI businesses and the continuous explosion of customer demand. All the giants pointed out that the accelerated growth in AI sales revenue and the continuous realization of return on investment are the core logic driving their increased infrastructure investment. Meanwhile, computing power supply will remain in short supply throughout 2026, further reinforcing the urgency for the giants to expand production. For the semiconductor industry, this means that AI chip suppliers represented by NVIDIA, as well as sub-sectors such as memory, semiconductor equipment, power semiconductors, and optical devices, will continue to benefit from this super cycle of capital expenditure.

Accelerated AI Monetization Gives Giants Confidence to Spend

The recent capex hikes by the cloud giants are not blind expansions but are supported by real business data.

At Google, the number of tokens generated per minute via direct API calls by the Gemini large language model has exceeded 16 billion, a 60% quarter-on-quarter increase; paid monthly active users for Gemini Enterprise grew 40% quarter-on-quarter, becoming the main growth engine for Google Cloud in the first quarter; Google's search business growth rate reached 19%, the fastest in recent years, with AI-driven search queries being a key driver.

At Microsoft, the annualized run rate for AI-related sales has exceeded $37 billion, a 123% year-on-year increase; management expects that despite ongoing supply constraints, Azure cloud services will achieve moderate acceleration in the second half of 2026.

Amazon AWS's first-quarter sales grew 28% year-on-year to $37.6 billion, the fastest segment growth rate in over three years. The company believes demand is driven by AWS's own workloads and partnerships with organizations like OpenAI and Anthropic through Bedrock.

Comprehensive Capex Hikes by the Four Giants

In terms of specific figures, the 2026 capital expenditure scales of the four giants have all increased significantly compared to previous market expectations.

Google's first-quarter capex was $35.7 billion, in line with expectations, but the full-year guidance was raised to approximately $185 billion, higher than the previous $175 billion, with a preview of a "significant increase" in 2027.

Microsoft's first-quarter capex was slightly below expectations, mainly due to quarterly pacing, but the full-year guidance was raised to $190 billion, a 61% year-on-year increase, far exceeding the previous market expectation of approximately $154 billion.

Amazon's first-quarter capex slightly exceeded expectations, maintaining a strong full-year guidance of over $200 billion, a year-on-year increase of more than 50%.

Meta's first-quarter capex was below expectations, also affected by quarterly pacing, but the midpoint of its full-year guidance was raised to $135 billion, higher than the previous $125 billion.

Overall, Bank of America has raised its forecast for global hyperscale cloud providers' capex in 2026 to over $804 billion, an increase of about 7% from the previous expectation of approximately $750 billion, and expects it to further move toward $1 trillion in 2027.

Cost Increases Incorporated into Budgets, Highlighting Semiconductor Manufacturers' Pricing Power

Notably, while raising capital expenditures, the giants explicitly stated that they have incorporated rising raw material costs into their budgets, a statement of significant importance to the semiconductor supply chain.

Microsoft clearly pointed out that its $190 billion capex expectation for 2026 includes approximately $25 billion in price increases for components, which accounts for about 70% of the increase relative to the previous market expectation ($154 billion). The areas involving cost increases include key raw materials such as memory, wafers, and substrates.

Bank of America believes this signal means that the pricing power and profit margins of AI semiconductor suppliers will generally remain solid, and major computing power and network equipment manufacturers have the ability to pass on cost increases to downstream customers.

Limited Computing Power Supply, Heterogeneous Deployment Becomes Mainstream

The Bank of America report specifically pointed out that computing power supply will continue to be in short supply throughout 2026, which is one of the important backgrounds driving hyperscale cloud providers to continuously expand capital expenditure.

Regarding chip deployment strategies, the report noted that most hyperscale cloud providers are placing equal emphasis on the heterogeneous mixed deployment of commercial GPUs and self-developed custom chips, rather than relying solely on one type of computing solution. This trend means that commercial GPU suppliers like NVIDIA and the self-developed chip projects of various cloud giants will develop in parallel, jointly undertaking the massive demand for computing power.

Bank of America summarized the main beneficiaries in the AI semiconductor sector into five categories: computing power (represented by NVIDIA), memory, semiconductor equipment, power semiconductors, and optical devices.

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