According to the Zhitong Finance APP, Evercore ISI released a research report indicating that total capital expenditures of core hyperscale companies in the United States accelerated growth in the first quarter, reaching approximately $81 billion, a year-on-year increase of 71%. Driven by ongoing investments in artificial intelligence and cloud infrastructure, all major hyperscale companies saw significant year-on-year growth in capital expenditures in the third quarter. More importantly, Evercore ISI raised its forward-looking estimate for year-on-year growth in U.S. cloud computing capital expenditures in 2025 to 44% (previously expected at 38%), as hyperscale companies continue to increase investments in artificial intelligence infrastructure.
Additionally, Evercore ISI believes that the upward revision of capital expenditure forecasts should help alleviate any recent concerns about a pause/slowdown in data center capacity demand. The agency still believes that generative artificial intelligence could trigger a sustained wave of investment for years to come, driven by today's model training expansion use cases (from inference and other AI workloads). The expansion/expectation of capital expenditures is primarily driven by hyperscale tech companies such as Google (GOOGL.US), Microsoft (MSFT.US), Meta (META.US), Amazon (AMZN.US), and Oracle (ORCL.US).
Google: Capital expenditures in the first quarter increased by 43% year-on-year, driven by servers, followed by data center investments. Google still expects to spend $75 billion in 2025 (approximately a 43% year-on-year increase).
Microsoft: Capital expenditures in the first quarter increased by 53% year-on-year, and the company expects capital expenditures to continue to grow in the second quarter (indicating a significant increase in second-quarter capital expenditures); the company expects capital expenditures for the fiscal year 2026 (ending in June) to continue to grow, although at a slower pace.
Meta: Capital expenditures in the first quarter increased by over 100% year-on-year, and they raised their capital plan for 2025 from $60-65 billion to $64-75 billion.
Amazon: Capital expenditures in the first quarter increased by 72% year-on-year to $25 billion, primarily driven by technology infrastructure.
Oracle: Capital expenditures in the first quarter more than doubled, and it raised its capital expenditure guidance for fiscal year 2025 (ending in May) to $16 billion (more than double year-on-year).
Generative artificial intelligence is the incremental driver of data center spending: Generative artificial intelligence will create meaningful tailwinds for the broader data center ecosystem. From a technology infrastructure perspective, hyperscale companies will need to invest in GPU servers and auxiliary hardware (management servers/storage, networking) to run AI workloads, benefiting OEMs such as Arista Networks (ANET.US), Juniper Networks (JNPR.US), and Cisco (CSCO.US). Higher power/cooling density requirements will drive demand for suppliers like Vertiv Holdings (VRT.US). Finally, the connection-intensive model training clusters will drive demand for connectors/cables/fiber optics (Amphenol (APH.US), Ciena (CIEN.US), CommScope (COMM.US))

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Evercore ISI raised its forecast for U.S. cloud computing capital expenditures to a year-on-year growth of 44% by 2025, primarily driven by investments in artificial intelligence and cloud infrastructure. In the first quarter, capital expenditures of core U.S. hyperscale companies accelerated to $81 billion, a year-on-year increase of 71%. Capital expenditures from tech giants such as Google, Microsoft, Meta, and Amazon have all seen significant growth and are expected to continue driving future investment waves

- Evercore ISI reports that U.S. core hyperscale companies' capital expenditures accelerated in Q1, reaching approximately $81 billion, a 71% year-over-year increase.  
- The forecast for 2025 U.S. cloud computing capital expenditures has been raised to a 44% year-over-year growth, driven by ongoing investments in AI infrastructure from major tech firms like Google, Microsoft, Meta, Amazon, and Oracle.  
- This expansion in capital spending is expected to alleviate concerns regarding a slowdown in data center capacity demand, with generative AI anticipated to spur a sustained investment wave in the sector.

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Evercore ISI raises the forecast for U.S. AI cloud computing capital expenditures and points out potential beneficiaries in U.S. stocks