Hyperscaler capital expenditures are set to reach $300 billion in 2025 across key players, including Amazon (AMZN, Financials), Google (GOOGL, Financials), Microsoft (MSFT, Financials), and Meta (META, Financials), according to a forecast by Morgan Stanley.

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With respective estimated investments of $96.4 billion and $89.9 billion, Amazon and Microsoft are set to top expenditure. Following with anticipated spending of $62.6 billion and $52.3 billion are Google and Meta.

Driven mostly by investments in generative artificial intelligence and huge language models, the predicted expenditure represents a multi-year potential for hyperscale firms.

"Continued AI-driven platform-level innovation on Search, YouTube, and with other offerings improves confidence in the durability of long-term growth," said Morgan Stanley analysts, led by Brian Nowak, in an investor note regarding Google.

Meta still gives leaner operations, productivity, and efficiency first priority. "Importantly, revenue and engagement trends are also improving across Meta's platform," Nowak said. "Our industry and company conversations speak to progress driving incremental Reels engagement and monetization."

Microsoft keeps expanding public cloud use and artificial intelligence, so it is a leading spender in this area. "Multiple expansion and positive estimate revisions will come from greater than expected strength in commercial business in coming years," Nowak said.

Meanwhile, Amazon is projected to spend the most on hyperscaler initiatives in 2025. "Amazon's high-margin businesses continue to allow Amazon to drive greater profitability while still continuing to invest," Nowak added. "Cloud is in a multi-decade secular adoption cycle, Amazon is gaining share in eCommerce/retail and share of consumers' wallets."

This article first appeared on GuruFocus.