A global cloud infrastructure competition, driven by AI and costing hundreds of billions of dollars, is heating up at an unprecedented pace. The enormous demand for computing power is fueling the growth of AI chip giants.
Since the launch of ChatGPT by OpenAI at the end of 2022, major computing companies have been actively increasing their capital expenditures, a trend that continued and accelerated in the second quarter of 2025. Recently, Morgan Stanley's latest research report significantly raised its forecast for the capital expenditures of the four major U.S. cloud service providers—Amazon, Google, Meta, and Microsoft. Morgan Stanley also emphasized that the market may be severely underestimating the demand from second-tier cloud service providers.
"Burning cash" accelerates as cloud giants exceed capital expenditure expectations
Morgan Stanley's report states that the capital expenditure growth of the four major U.S. cloud giants is reaccelerating, with the total cloud capital expenditure for the 'cloud quartet' reaching $100 billion in the fourth quarter of 2025, representing a 39% year-over-year increase. The bank also revised its full-year 2025 capital expenditure growth forecast for these four companies from 38% to 57%, totaling $359 billion, and increased its 2026 growth forecast from 17% to 26%, amounting to $454 billion.
An overlooked corner of the market: second-tier cloud providers catching up
If we broaden our perspective to the world's top 11 cloud service providers, this investment boom is even more pronounced. The report's data shows that the total capital expenditures of these companies in 2025 are expected to reach $445 billion, far exceeding the $400 billion forecast before the earnings season, and roughly equivalent to the combined cloud capital expenditures of 2023 and 2024. By 2026, the ratio of these companies' capital expenditures to their revenues will exceed 20%, setting a new historical high.
In addition, second-tier cloud service providers are also making efforts to catch up and are expected to start significantly increasing their capital expenditures in the second half of 2026. These companies may even have larger reserves of AI servers than the leading cloud vendors, opening up a broader market.
In the AI capital expenditure boom, who will emerge as the big winners?
According to a Morgan Stanley research report, cloud capital expenditures have a significant impact on global semiconductor revenue, with a correlation of 0.69. The surge in capital spending by cloud service providers will ultimately benefit a number of AI chip giants.
Focusing on the world's top four AI chip manufacturers, the wave of cloud capital expenditures has driven record data center revenues for the four chip stocks.
$Intel (INTC.US)$ In Q2 2025, data center and AI revenue reached $3.939 billion;
$Advanced Micro Devices (AMD.US)$In Q2 2025, data center revenue reached $3.240 billion;
$Broadcom (AVGO.US)$In Q2 2025, AI-related revenue is expected to reach $5.100 billion (according to official guidance).
As for the AI chip leader, $NVIDIA (NVDA.US)$data center revenue is expected to reach $40.912 billion in Q2 2025 (according to Bloomberg forecasts).
In terms of revenue share, NVIDIA's data center revenue as a proportion of the total data center revenue of the 'big four' chip companies is continuously increasing, rising from 46.07% in Q1 2023 to 76.92% in Q2 2025.
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Editor/joryn
