Big Tech's $700 Billion AI Buildout Faces 20% Cost Inflation as 2027 Capex Climbs
Updated
Updated · Business Insider · Jul 18
Big Tech's $700 Billion AI Buildout Faces 20% Cost Inflation as 2027 Capex Climbs
3 articles · Updated · Business Insider · Jul 18
Summary
$700 billion in planned 2026 AI data-center spending by Google, Amazon, Microsoft and Meta is under fresh scrutiny as rising costs dilute how much new capacity that money buys.
Morgan Stanley estimates one gigawatt of AI capacity now costs about 20% more, with an Nvidia-based system rising from roughly $29 billion to $35 billion and a newer version from $41 billion to $49 billion.
Memory chips, power equipment, construction materials, skilled labor and grid connections are all tightening supply, creating a loop in which heavier orders worsen shortages and push prices even higher.
Brad Gastwirth estimates 20% to 30% of the next capex increase will reflect inflation rather than expansion, while earlier research said soaring memory prices could explain about 45% of this year's cloud capex growth.
Cantor Fitzgerald expects little change to 2026 plans this earnings season but sees 2027 estimates jumping to $283 billion for Google, $271 billion for Amazon and $200 billion for Meta, even as investors seek proof that higher spending means real buildout.