BofA: Hyperscalers
Massive Capital Expenditure (Capex) Surge> Record Growth in 2025–2026: Combined capex for the top US tech companies (Amazon, Microsoft, Alphabet, Meta, and Oracle) is projected to grow ~65% YoY in 2025 to reach a massive scale, followed by an additional ~100% YoY jump in 2026 to hit $730 billion.> Hitting the $1 Trillion Milestone: Combined annual capex is expected to surpass $1 trillion per annum by 2027 and 2028.> Individual Hyperscaler Breakdown (2026E): Oracle and Alphabet lead the YoY percentage growth chart for 2026E with triple-digit increases (around 120% and 118% respectively), closely followed by Microsoft and Meta.Robust Cloud Revenue Growth> Consistent Expansion: Cloud revenue across major providers (AWS, Microsoft Azure, and Google Cloud) remains structurally strong, maintaining a solid 35–45% YoY growth trajectory through 2026–2028.> Revenue Trajectory: AWS continues to hold the top spot in total revenue terms heading into 2028, with Microsoft Azure and Google Cloud tracking closely behind on steep upward curves driven by surging AI infrastructure demand.Temporary Free Cash Flow (FCF) Pressure> Short-Term Dip: Driven by unprecedented AI infrastructure investments, several hyperscalers are expected to experience temporarily negative Free Cash Flow (FCF) through 2026 and 2027 as spending outpaces near-term cash flow growth.> Quarterly Volatility: Quarterly trends highlight notable dips into negative FCF territory for companies like Amazon and Alphabet during peak spending quarters before stabilizing.$Oracle(ORCL.US) $Microsoft(MSFT.US) $Meta Platforms(META.US) $Alphabet(GOOGL.US) $Amazon(AMZN.US)
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