Recent analysis from Morgan Stanley indicates that global cloud computing capital expenditures are projected to surge to approximately $735 billion by 2026, marking a year-over-year increase of about 60%. This would represent the third consecutive year with growth exceeding 60%. The forecast has been significantly revised upward by 22 percentage points compared to estimates from just three weeks ago, adding roughly $120 billion in projected spending.
The primary driver behind this substantial revision is the robust capital expenditure guidance issued by the four leading US hyperscale cloud providers during the latest earnings season. Alphabet, Amazon, Microsoft, and Meta Platforms, Inc. have all notably increased their investment plans for 2026. Although the growth rate is expected to moderate slightly compared to 2025, this marks the first time in industry tracking history that the world's top 11 cloud service providers have maintained such high-intensity capital expenditure growth for three consecutive years.
The research suggests that as AI-driven computing demand continues to outpace supply, the cycle of heavy investment in cloud infrastructure is set to persist. This trend presents a clear positive for suppliers within the cloud computing supply chain that have significant exposure to capital expenditure.
Capital expenditure intensity has reached a historic peak. The capital expenditure intensity of the top 11 global cloud service providers has climbed to a record high of over 26% of total revenue, which is three times the average level seen between 2014 and 2023. Just one year ago, market forecasts for global cloud capital expenditure in 2025-2026 were approximately $7.1 trillion. The current expectation has now jumped significantly to $12 trillion, implying a cumulative upward revision of nearly $500 billion.
Morgan Stanley's own forecast for 2026 global cloud capital expenditure has reached $795 billion, roughly 8% higher than the current market consensus. Given that major cloud providers have consistently raised their capital expenditure guidance quarter-over-quarter for at least the past nine consecutive quarters, analysts believe there is still room for further upward revisions to market expectations.
The four major US hyperscale cloud providers have further clarified the AI-driven acceleration of capital spending in their recent earnings reports. Meta Platforms, Inc. set its 2026 capital expenditure guidance at $115-135 billion. Calculating by the midpoint, this represents a 73% year-over-year increase, with funds primarily directed towards the Meta AI supercluster and broader AI infrastructure requirements.
Alphabet announced a 2026 capital expenditure guidance of $175-185 billion. The midpoint of this range indicates a 97% year-over-year increase, with spending expected to ramp up quarter-by-quarter throughout the year. This investment will mainly support Google DeepMind, optimization of user-facing AI features, and large-scale cloud infrastructure expansion. The company indicated that approximately 60% of the spending will be for server procurement, with the remaining 40% allocated to long-term assets like data centers and networks.
Amazon anticipates 2026 capital expenditure to be around $200 billion, a 52% increase year-over-year, primarily focused on its AWS business. This is to address stronger-than-expected growth in core non-AI business and AI cloud workloads. The company emphasized that its monetization pace is largely keeping up with its capacity deployment schedule.
Microsoft did not provide specific quantitative guidance for 2026 but noted that capital expenditure for the quarter ending March might decline sequentially due to fluctuations in cloud infrastructure build-out timing and financing lease delivery schedules. Management stated that the proportion of capital expenditure allocated to short-lived assets, such as CPU and GPU servers, is expected to remain around two-thirds, similar to the previous quarter's structure.
The supply chain stands to benefit significantly. According to Morgan Stanley's analysis, revenue contribution from cloud capital expenditure averages 45% across the more than 50 technology companies it covers.
As the volume of AI tokens processed monthly grows exponentially, the revenue growth rates for Google Cloud, AWS, and Azure are accelerating. Data center construction commitments continue to expand, and key component suppliers are widely reporting accelerated demand and extended visibility. Morgan Stanley believes these factors will collectively continue to exert upward pressure on capital expenditure forecasts for hyperscale cloud providers.
Cloud revenue growth for the top four US cloud providers is expected to accelerate to a range of 30%-35% in the coming quarters, which would be the strongest growth level since 2020. Based on the firm's projections, non-AI related cloud capital expenditure, after growing 80% year-over-year in 2025, will still maintain high growth close to 60% in 2026.
Market expectations continue to be revised upward. Over the past year, the market consensus for 2026 cloud capital expenditure has been revised up by approximately 100%, a cumulative increase of about $3.7 trillion. Morgan Stanley notes that as long as the qualitative outlook for cloud spending remains positive, there is potential for these forecasts to be revised even higher.
All four major US hyperscale cloud providers have indicated that they will continue to face supply constraints for key computing resources throughout 2026. They plan to address rapidly escalating demand by accelerating investment and optimizing capacity allocation. This persistent supply-demand imbalance provides structural support for maintaining high-intensity capital expenditure growth.
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