Big Tech's AI Spending Surge: Citigroup Forecasts $2.8 Trillion by 2029
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Citigroup forecasts Big Tech's AI spending to cross $2.8 trillion by 2029
Sept 30 (Reuters) - Citigroup has raised its forecast for AI-related infrastructure spending by tech giants to surpass $2.8 trillion through 2029, from $2.3 trillion estimated earlier, citing aggressive early investments by hyperscalers and growing enterprise appetite. The AI boom ignited by
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Citi Sees Big Tech Spending Even More on AI Next Year -- Here's How Much
Other financing methods, like the investment agreement announced by OpenAI and Nvidia last week, have worried some onlookers fearful of an AI bubble. After a series of big cloud computing deals this month, Citigroup analysts now expect AI spending to exceed their already eye-watering
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Citigroup forecasts Big Tech's AI spending to cross $2.8 trillion by 2029 - The Economic Times
The AI boom ignited by ChatGPT's launch in late 2022 has continued to fuel staggering capital outlays and data center expansion despite a brief crisis of confidence sparked by China's cheaper DeepSeek model and lingering market concerns over U.S. President Donald Trump's tariff policies.Citigroup
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AI Spending Could Exceed $2.8 Trillion Through 2029 | PYMNTS.com
By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. That's according to a report Tuesday (Sept. 30) by Reuters, citing projections
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BofA expects annual AI investments to nearly triple between CY25-30E to over $1.2T By Investing.com
Investing.com -- Bank of America analysts said they remain bullish on artificial intelligence capital spending and forecast annual investments will "nearly triple between CY25-30E to over $1.2Tn+, constrained only by [the] ability to scale buildings and power." The firm highlighted four main
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Citigroup forecasts Big Tech's AI spending to cross $2.8 trillion by 2029
(Reuters) -Citigroup has raised its forecast for AI-related infrastructure spending by tech giants to surpass $2.8 trillion through 2029, from $2.3 trillion estimated earlier, citing aggressive early investments by hyperscalers and growing enterprise appetite. The AI boom ignited by ChatGPT's
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Citigroup raises its forecast for AI-related infrastructure spending by tech giants to $2.8 trillion through 2029, citing aggressive investments by hyperscalers and growing enterprise demand. The AI boom continues to fuel massive capital outlays and data center expansion.
Citigroup's Revised AI Spending Forecast
Citigroup has significantly raised its forecast for AI-related infrastructure spending by tech giants, projecting it to surpass $2.8 trillion through 2029, up from its earlier estimate of $2.3 trillion
1
. This revision is attributed to aggressive early investments by hyperscalers and growing enterprise appetite for AI technologies3
.
Source: PYMNTS
Hyperscalers' Capital Expenditure
The Wall Street brokerage anticipates AI capital expenditure across hyperscalers to reach $490 billion by the end of 2026, an increase from its previous estimate of $420 billion
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. Data center operators, including Microsoft, Amazon, and Alphabet, have already invested billions to address capacity constraints hampering their ability to meet surging AI demand2
.
Source: ET
AI Compute Demand and Power Capacity
Citi estimates that global AI compute demand will require 55 gigawatts of new power capacity by 2030, translating to $2.8 trillion in incremental spend, with $1.4 trillion in the U.S. alone
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. The costs are substantial, with approximately $50 billion required for every 1 GW of compute capacity3
.Shift in Funding Strategies
Big tech firms are no longer relying solely on profits to fund AI infrastructure. The enormous costs have led companies to borrow to keep up with demand
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. This shift is already impacting their financials, with spending starting to eat into free cash flows2
.Novel Financing Approaches
Companies are exploring innovative financing methods. For instance, Oracle recently sold $18 billion of bonds in the second-largest U.S. debt deal this year to increase its cloud capacity
2
. OpenAI struck a deal with Nvidia to deploy 10 GW of Nvidia systems over five years in exchange for a $100 billion equity investment, potentially reducing hardware costs by 10-15% through leasing arrangements2
.Related Stories
Enterprise Adoption and Market Validation
Citi analysts point to production deployments at companies such as Eli Lilly, Hitachi, and Wolters Kluwer as clear external validation of AI's value
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. The rate of AI's technological progress is rapidly expanding the scope of potential applications, with companies like OpenAI and Meta rolling out AI-driven services with clear monetization prospects2
.Long-term Projections and Risks
Bank of America analysts forecast that annual AI investments will nearly triple between 2025 and 2030, potentially exceeding $1.2 trillion
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. However, this massive spending introduces new risks for enterprises buying AI services, with concerns about balance sheet durability and the terms of financing becoming increasingly important4
.References
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