U.S. bank Citigroup (C) says that mega-cap technology companies such as Microsoft (MSFT) and Amazon (AMZN) will spend more than $2.8 trillion U.S. on artificial intelligence (A.I.) infrastructure by 2029.
Citigroup had previously forecast $2.3 trillion U.S. in A.I.-related spending by decade’s end due largely to aggressive investments by hyperscalers and enterprise companies.
The A.I. boom that was ignited by the launch of ChatGPT in 2022 has continued to fuel massive capital spending on A.I. technologies and data centres.
New York-based Citigroup expects A.I. capital expenditures by mega-cap technology companies that also include Meta Platforms (META) and Alphabet (GOOGL) to reach $490 billion U.S. by the end of 2026.
Companies such as Microsoft, Amazon and Alphabet have already spent billions of dollars on building data centers and purchasing the microchips and energy needed to power them.
Analysts at Citigroup estimate that global A.I. compute demand will require 55 gigawatts of new power capacity by 2030, translating to $2.8 trillion U.S. in spending.
Half of that spending, $1.4 trillion U.S., is expected to occur in America.
The bank added that technology companies are no longer relying solely on profits to fund A.I. Major tech firms are now borrowing money to keep up in the global A.I. race.
Citigroup says that the heavy capital expenditures on A.I. can be expected to show up in the financials of technology companies, with spending starting to erode free cash flow.
The stock of Citigroup is up 48% this year and trading at $103.16 U.S. per share.
