Hyperscaler capex will reach $785 billion this year and close in on $1 trillion in 2027, according to projections from Moody’s Ratings.

This is a significant rise from March, when the ratings agency forecast that hyperscaler capex would reach $700bn this year.

Microsoft, Amazon, Meta, Alphabet, Oracle, and CoreWeave were included in the forecast. Moody’s noted that AWS capex was an estimate, as Amazon does not report AWS-specific capex.

Of these, AWS, Microsoft Azure, and Alphabet’s Google Cloud Platform are making the biggest investments in AI infrastructure.

Google Cloud’s revenue grew by 63 percent, with operating income more than doubling Year-on-Year (YoY), according to Moody’s. And AWS revenue grew 28 percent YoY, the company’s fastest growth in 15 quarters.

Combined, the revenue growth rate of AWS, Microsoft Azure, and Google Cloud in Q1 2026 was the fastest it has been since Q2 2021, when their combined cloud revenue was a third of what it is today.

Looking at AI more specifically, in Q1 2026, AWS’ and Microsoft’s AI revenue run rate increased to more than $15 billion and $37 billion, respectively. Microsoft’s AI revenue run rate grew 123 percent YoY.

Hyperscaler spending is backed up by growth in revenue backlogs, with hyperscalers adding around $700bn in remaining performance obligations (RPOs) over the last two quarters. RPOs represent the total value of contracted products or services that have not yet been delivered to customers.

Much of this growth comes from AI providers OpenAI and Anthropic, which Moody’s said are themselves experiencing huge growth and struggling to find the computing capacity to meet this demand.

Moody’s said this growth in backlog, growing adoption of AI, and compute shortages are indicating a multi-year growth trajectory in AI infrastructure.

However, hyperscaler capex is eating into their operating cash flow while debt and lease liabilities increase.

In its March report, Moody’s warned that higher capital intensity and debt levels for hyperscalers could lead to a “reassessment of creditworthiness” if profit growth fails to materialize.

Moody’s did warn that data center spending would further increase semiconductor shortages and hurt other tech sectors, including large IT hardware markets, such as PCs, smartphones, gaming, and other consumer electronics.

Specifically, Moody’s called out Apple as suffering from this shortage, as it has been unable to sufficiently find chip supplies to keep pace with the demand for its products.

According to the forecast, memory costs for lower tier PC and smartphones could rise to 30 percent or more of total input costs, with PC and smartphone unit volumes declining in double digits in 2026.