Hyperscalers Increase Capex for AI in 2025: A Boost for NVIDIA

Recently, major tech companies known as hyperscalers, including Alphabet, Microsoft, Amazon.com, and Meta, released their financial results for the third quarter. Along with their earnings, they shared insights about their planned capital expenditures (Capex) for the upcoming years, particularly amid the ongoing boom in artificial intelligence (AI).

According to Brian Nowak, an internet analyst at Morgan Stanley, these hyperscalers are projected to spend more than $300 billion on Capex in 2025. This figure represents a significant increase of 25% compared to 2024, and it is nearly double the expenditures from 2023.

With this rise, analysts have adjusted their estimates for 2025 Capex, increasing it by 9%. The companies expected to come out on top in terms of spending are Amazon and Microsoft, who are anticipated to expend $96.4 billion and $89.9 billion, respectively.

Nowak emphasized the long-term vision of these investments, suggesting that companies like Amazon, Alphabet, Meta, and Microsoft will invest approximately $300 billion to $335 billion in Capex through 2025 and 2026. These expenditures show the increasing importance of adopting and leveraging generative AI and large language model (LLM)-enabled opportunities.

Among the key players in this spending spree, NVIDIA stands out as the major beneficiary. NVIDIA manufactures advanced AI chips that are essential for the new infrastructure being developed by these companies.

Analyst Vivek Arya from BofA Securities predicts that NVIDIA will capture over 75% of the AI accelerator market share through 2027. In contrast, competitors like Advanced Micro Devices and Broadcom are expected to hold only mid-single-digit market shares.

Arya further estimates that the AI accelerator market could grow to $280 billion by 2027 and potentially exceed $400 billion as time progresses, a large increase from just around $45 billion in 2023.

hyperscalers, Capex, NVIDIA