Khaberni - Citigroup has raised its spending forecast for major tech companies on artificial intelligence infrastructure to exceed $2.8 trillion by 2029, previously estimated at $2.3 trillion.
Citigroup attributed its expectations to early intensive investments by major cloud computing companies and growing corporate demand.
The artificial intelligence boom, sparked by the launch of "ChatGPT" in late 2022, continued to drive massive capital expenditures and the expansion of data centers, despite a short-lived trust crisis caused by China's lower-cost "DeepSec" model and ongoing market concerns about U.S. President Donald Trump’s tariff policies, according to "Reuters".
Citigroup expects capital spending on artificial intelligence by major cloud computing companies to reach $490 billion by the end of 2026, up from its previous estimates of $420 billion.
Ultra-large data center operators including "Microsoft", "Amazon", and "Alphabet" have already spent billions of dollars in investments to alleviate capacity constraints that have hampered their ability to meet the growing demand for artificial intelligence.
Citigroup analysts said it is likely that ultra-large computing companies will reflect this increased spending in their third-quarter earnings reports, as financial guidance is expected to be linked to "advance preparedness for substantial institutional demand".
Citigroup estimates that global demand for artificial intelligence computing capabilities will require 55 gigawatts of new capacity by 2030, translating into $2.8 trillion of increased spending, including $1.4 trillion in the United States alone.
It added that major tech companies no longer rely solely on profits to fund artificial intelligence infrastructure. The costs are extremely high—about $50 billion per gigawatt of computing capacity—and the companies are borrowing to keep up with the demand.
This shift is already evident in the financial data of companies, where spending has begun to reduce free cash flows. Investors are now wondering how technology companies will finance this level of investment, especially as traditional models fail to meet cost requirements.
