Morgan Stanley is predicting the hyperscaler capex will reach as much as $300 billion in 2025.

Split between the likes of Amazon, Google, Microsoft, and Meta, the investment bank says the increased expenditure is driven but artificial intelligence (AI) investment.

As reported by Seeking Alpha, Morgan Stanley expects Amazon and Microsoft to lead the pack with $96.4bn and $89.9bn of capex respectively, while Google and Meta will follow at $62.6bn and $52.3bn.

Earlier this month, Bloomberg reported that capex for the four companies would exceed $200 billion this year, making the year-over-year increase as much as 50 percent.

Morgan Stanley analysts, led by Brian Nowak, said in an investor note: "Continued AI-driven platform-level innovation on Search, YouTube, and with other offerings improves confidence in the durability of long-term growth," regarding Google, adding that Microsoft will see "multiple expansion and positive estimate revisions [that] will come from greater than expected strength in commercial business in coming years."

Nowak suggests that Amazon, the company expected to see the greatest capex in 2025, is powered by its "high-margin business," which enables it to drive "great profitability while still continuing to invest."

"Cloud is in a multi-decade secular adoption cycle," adds Nowak.

While hyperscalers are increasingly "betting big" on AI, not all are confident that this will pay off.

Earlier this year, a research newsletter from Goldman Sachs warned that large tech companies have ramped up capital expenditure to fuel generative AI development, but have yet to show sustainable business models.

The investment banking firm estimated that around $1 trillion would be spent over the next few years on data centers, semiconductors, grid upgrades, and other AI infrastructure, but it's unclear whether it will generate the financial returns people are hoping for.