Big Tech Predicted to Spend $1.2 Trillion on AI Infrastructure by 2027
Goldman Sachs has made a bold prediction about the future of artificial intelligence (AI) infrastructure spending by Big Tech companies. According to the investment bank, Amazon, Alphabet, Microsoft, Oracle, and Meta will combine to spend over $1.2 trillion on AI infrastructure in 2027. This is significantly higher than the estimated $800 billion projected for this year and surpasses Wall Street's consensus estimate of $1.1 trillion, as cited by strategist Ryan Hammond.
This investment cycle would be the largest since railroad construction in the 19th century when measured relative to GDP. However, growth is slowing down - from nearly 100% in 2026 to 54% in 2027 and 12% in 2028. To offset these costs, the companies would need around $300 billion a year in AI revenue, which currently lags behind.
The predicted spending already exceeds what the companies generate from ongoing operations, leading Goldman to suggest that more debt financing will be necessary. Bottlenecks in power, labor, and memory chips could further hinder progress. Goldman had previously warned that consensus estimates were too low back in June.