Morgan Stanley Sees AI Infrastructure Spending Reaching $1.58 Trillion in 2027
Morgan Stanley projects AI infrastructure capex will rise 60% from $980 billion in 2026 to $1.58 trillion in 2027 and $1.81 trillion in 2028. It estimates AI-related companies will drive 78% of S&P 500 earnings growth, while AI spending contributes about 5% of projected 2027 index sales. A separate report estimates half of projected AI investment will be debt-financed.
Morgan Stanley projects AI infrastructure spending will reach 1.58 trillion in 2027, contributing roughly 24% of S&P 500 revenue growth. Companies tied to AI are forecast to account for 78% of the index’s earnings growth. About 1 trillion of projected 2027 AI spending is expected to flow into S&P 500 revenue, with Nvidia ($NVDA) representing approximately 690 billion of that modeled amount. AI beneficiaries and the Magnificent Seven account for 61.4% of projected Q3 2026 S&P 500 earnings growth.
Micron ($MU) contributes 18.8%, Nvidia ($NVDA) 15%, Meta ($META) 6.9% and Broadcom ($AVGO) 5%. FactSet projected Q3 earnings growth of 29% as of October 16, compared with 27% in Morgan Stanley’s chart. Morgan Stanley forecasts capital spending rising from 980 billion in 2026 to 1.58 trillion in 2027, an increase of +60%, and 1.81 trillion in 2028. AI spending represents about 5% of projected 2027 index sales.
Excluding that contribution, estimated revenue growth falls from 8.6% to 6.6%. The forecasts include 195 billion in 2027 lease capex, increasing to 246 billion in 2028. Hyperscalers have over 1.1 trillion in pending lease A separate report estimates that debt will finance half of projected AI investment. Rising borrowing costs and stress in credit markets could put expansion plans at risk, particularly for neocloud providers carrying heavy debt.