Morgan Stanley forecasts that global cloud computing capital expenditures will rise to $1.2 trillion by 2027, representing a 30% year-over-year increase and $170 billion higher than its estimate prior to the second quarter. The firm noted that the four largest U.S. hyperscale cloud service providers continue to face capacity constraints due to artificial intelligence demand far exceeding supply. As a result, Alphabet, Amazon, and Meta have all raised their capital expenditure expectations for 2026, while Microsoft has maintained its spending plans unchanged.