Tech Giants Boost AI Infrastructure Spending to $2.8 Trillion by 2029

Citigroup has increased its forecast for AI-related infrastructure spending by tech giants to over $2.8 trillion by 2029, driven by heightened investments from hyperscalers like Microsoft, Amazon, and Alphabet. The escalating AI compute demand necessitates substantial capital outlays and expanded data center capacities worldwide.

Citigroup has upwardly revised its projections for AI infrastructure investment by major technology firms, anticipating a rise to over $2.8 trillion by 2029. This adjustment comes as hyperscalers, including Microsoft, Amazon, and Alphabet, aggressively invest in capacity to meet swelling AI demand.

The launch of ChatGPT in late 2022 has been instrumental in sparking this surge in AI capital expenditures, despite challenges such as competition from China's DeepSeek and concerns arising from U.S. tariff policies under President Donald Trump. Citigroup projects AI capex for hyperscalers to climb to $490 billion by 2026, an increase from an earlier estimate of $420 billion.

To address capacity constraints, tech giants have substantially invested in data centers. This spending is reflected in their financial statements as they increasingly rely on debt, moving away from traditional profit-based funding models. Investors are scrutinizing these spending patterns, questioning sustainability and potential impacts on cash flows.