Table of Contents
Moody’s said hyperscaler investment momentum is being supported by rapid growth in remaining performance obligations (RPOs), which represent contracted but undelivered products and services
In sum – what to know:
Capex accelerating – Moody’s now expects hyperscaler capex to reach $785 billion in 2026 and approach $1 trillion in 2027, significantly higher than earlier forecasts.
AI demand surging – Strong growth in cloud and AI revenue, alongside expanding customer backlogs, is driving continued investment in AI infrastructure and compute capacity.
Financial pressure rising – While hyperscalers continue expanding AI infrastructure, higher spending levels are increasing debt exposure and pressuring operating cash flow.
Moody’s Ratings has significantly increased its forecasts for hyperscaler capital expenditure, projecting that spending will reach a total of $785 billion in 2026 and approach $1 trillion by 2027 as AI infrastructure investment accelerates.
The updated projection marks a substantial increase from Moody’s March forecast, which estimated hyperscaler capex would total approximately $700 billion this year.
The forecast includes spending by Microsoft, Amazon, Meta, Alphabet, Oracle and CoreWeave. Moody’s noted that Amazon Web Services (AWS) capex figures are estimated because Amazon does not separately disclose AWS-specific capital expenditure.
According to Moody’s, AWS, Microsoft Azure and Google Cloud Platform are leading current investment activity in AI infrastructure.
The ratings agency said Google Cloud revenue increased 63% year-over-year, while operating income more than doubled during the same period. AWS revenue grew 28% year-over-year, representing its fastest growth rate in 15 quarters.
Moody’s also noted that the combined revenue growth rate of AWS, Microsoft Azure and Google Cloud in the first quarter of 2026 was the strongest since the second quarter of 2021, despite the cloud market now being substantially larger than it was at that time.
AI-related revenue growth also continued to accelerate. During the first quarter of 2026, AWS and Microsoft reported AI revenue run rates exceeding $15 billion and $37 billion, respectively. Microsoft’s AI revenue run rate increased 123% year-over-year.
Moody’s said hyperscaler investment momentum is being supported by rapid growth in remaining performance obligations (RPOs), which represent contracted but undelivered products and services. According to the firm, hyperscalers added roughly $700 billion in RPOs over the past two quarters.
The report said much of this demand growth is linked to AI companies such as OpenAI and Anthropic, both of which continue to face constraints in securing sufficient compute capacity to support expanding workloads.
Moody’s also said growing AI adoption, rising backlogs and ongoing compute shortages point to a multi-year expansion cycle for AI infrastructure investment. At the same time, the agency warned that rising capex requirements are placing increasing pressure on hyperscaler financial profiles.
The report noted that higher levels of infrastructure spending are reducing operating cash flow while debt and lease liabilities continue to rise.
In a previous report published in March, Moody’s cautioned that sustained increases in capital intensity and debt levels could eventually lead to a “reassessment of creditworthiness” if expected profit growth does not materialize.
The agency also warned that accelerating data center and AI infrastructure spending could worsen semiconductor supply constraints and create pressure across other technology segments, including PCs, smartphones, gaming systems and broader consumer electronics markets.
