Citi has sharply raised its capital expenditure forecasts for three of the biggest names in tech. The bank now expects Alphabet, Meta, and Amazon to collectively spend $801 billion on infrastructure in 2027, with the bulk of that going toward artificial intelligence.
The numbers break down like this: $308 billion for Alphabet, $205 billion for Meta, and $288 billion for Amazon. Those figures represent increases of around 21%, 22%, and 12% respectively from prior estimates.
The scale of spending is so large that Citi expects all three companies to run negative free cash flow in both 2027 and 2028. That is unusual for businesses that each generate hundreds of billions in annual revenue.
Citi framed the spending as a deliberate strategic move, not a sign of financial trouble. The bank said the focus is on AI compute and infrastructure, driven by what it describes as continued strong demand.
On the cloud side, Citi is projecting Google Cloud Platform to grow 68.5% year-over-year in Q2 2026, reaching $190 billion in 2027. For the first time, Citi is including revenue from Google’s Tensor Processing Units in its model, with around $62 billion in TPU revenue baked into the 2027 forecast.
Amazon Web Services is expected to grow 32.5% in Q2 2026, with growth accelerating to 40% in 2027. Citi attributes that to rising AI adoption and increased compute capacity.
Beyond cloud, Citi also sees improving conditions in digital advertising and e-commerce, based on checks from the Cannes advertising festival. The bank expects Q2 results to beat Wall Street estimates for all three companies.
Not everyone is convinced the market reaction was warranted. CNBC’s Jim Cramer said Wednesday’s tech rally looked more like a wave of optimism than a response to real fundamental changes.
Alphabet rose more than 3% after Warren Buffett confirmed he personally decided for Berkshire Hathaway to invest in the company. Cramer said the Buffett endorsement eased fears about Alphabet’s heavy AI spending.
Meta and Amazon each climbed around 3%. Cramer said Meta’s rise made sense following its July 1 announcement about selling excess compute capacity. He was more skeptical on Amazon, saying the company “still doesn’t seem to be able to show any return” on its AI spending.
Microsoft gained about 2.5% after a bullish Citi note pointed to strong momentum in Copilot and Azure heading into fiscal 2027.
Cramer also pointed to a disconnect in the market. Dell and Micron, two companies closely tied to AI infrastructure, dropped around 10% and 8% respectively, despite what Cramer described as solid fundamentals.
He said the gap between winners and losers on the day reflected sentiment shifts rather than meaningful new information, and that fundamentals would come back into focus as earnings season progresses.
All three companies are expected to report Q2 2026 results in the coming weeks.
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