Morgan Stanley: Cloud CapEx
Cloud Capital Expenditure (Capex) Surges > Massive Uptick in 2027 Forecasts: Following recent US hyperscaler earnings, consensus for 2027 cloud capex has jumped significantly. The forecast is now tracking at approximately $1.2 trillion, a growth of around 30% year-over-year. This is a dramatic increase of about $170 billion and 15 points higher than predictions made just before the recent earnings. > A "too conservative" Consensus? While the current forecast predicts a slowdown in growth (to 29% Y/Y) for 2027 after an incredibly strong 2026, the report suggests this may be an underestimate. Morgan Stanley's own estimate is even higher at $1.4 trillion. The authors also note that aggregate estimates for the top 14 spenders have gone up in each of the last ten quarters.> The AI Impact: The sharp increase in spending, which is ~4x the historical capital spending intensity average for the sector, is clearly fueled by investment in artificial intelligence. The text notes that the current 2027 growth forecast of 29% implies that non-AI cloud capex growth would be just 7%.> Historical Spending Patterns: A historical chart shows the highly cyclical and recently explosive nature of this spending. Growth was modest for years, with negative growth as recently as 2019 and 2023, before skyrocketing to a projected 97% in 2026 and then potentially cooling to 29% in 2027 (though, as mentioned, that 29% figure is up significantly from a forecast of 14% just a month ago).$Alphabet(GOOGL.US) $Amazon(AMZN.US) $Microsoft(MSFT.US) $Meta Platforms(META.US)
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