Hyperscalers' massive 2025 capex hike for AI means big wins for NVIDIA

Investing.com -- Hyperscalers like Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), and Meta (NASDAQ:META) reported their third-quarter financial results last week and, with the numbers, also provided updates on their Capex spending plans amid the ongoing AI boom. The numbers and growth are impressive, to say the least.  Morgan Stanley (NYSE:MS) internet analyst Brian Nowak highlighted that they now see 2025 capex for the hyperscalers reaching over $300 billion, up 25% from 2024 and nearly double 2023.

As a result, the analyst raised their 2025 capex estimates by 9%.  The biggest spenders will be Amazon and Microsoft, spending $96.4 billion and $89.9 billion, respectively.

"In all, we now expect AMZN/GOOGL/META/MSFT to spend ~$300bn/$335b+ in '25/'26 as they continue to invest in the multi-year GenAI and LLM-enabled opportunities," Nowak commented. "These high and rising capex numbers again speak to the importance of continued disclosure about new/incremental adoption, engagement, and revenue opportunities each of the four companies are seeing and investing in."

The biggest beneficiary from all the new spending is NVIDIA (NASDAQ:NVDA), which makes the high-end AI chips needed to power the massive new infrastructure.

BofA Securities analyst Vivek Arya expects Nvidia to get over 75% of the AI accelerator market share through 2027.  Meanwhile, Advanced Micro Devices Inc (NASDAQ:AMD) and Broadcom Inc (NASDAQ:AVGO) are both expected to get in the mid-single digit share.

"We continue to expect the AI accelerator to grow to $280bn by CY27E (and over time toward $400bn+) from just ~$45bn in CY23," Arya commented.