Morgan Stanley projects that capital expenditures for hyperscale companies such Amazon (NASDAQ:AMZN), Alphabet (GOOG, GOOGL), Microsoft (NASDAQ:MSFT), and Meta Platforms (Meta) will skyrocket to $300 billion in 2025. Reflecting a major long-term opportunity, the expenditure increase shows rising investment to support developments in generative artificial intelligence (AI) and massive language models.

While Google and Meta intend to invest $62.6 billion and $52.3 billion, respectively, Amazon and Microsoft are expected to lead in capex, devoting $96.4 billion and $89.9 billion, respectively. The strategic expansion of these companies depends mostly on AI-driven innovation; Google wants to increase income by improving Search, YouTube, and other products. "AI-driven platform-level innovation...improves confidence in long-term growth," Brian Nowak, of Morgan Stanley said.

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While Microsoft is growing its cloud and AI offerings driven by business demand, Meta is streamlining operations for efficiency and increasing engagement on its platforms. With high-margin areas, likely to outpace capex spending, Amazon gains from aggressive investment in its cloud and eCommerce operations, Nowak said, stressing Amazon's "multi-decade secular growth."

This article first appeared on GuruFocus.