GF Securities: AI capex by US cloud providers continues to grow, with a marked slowdown expected in 2028

How much were cloud providers’ capex forecasts lowered?

GF Securities expects combined capex at the five largest US cloud providers to total 829 billion dollars in 2026, up 85% year over year; it will rise to 1.182 trillion dollars in 2027, with growth of 43%, down 10 percentage points from the previous forecast of 53%.
The firm expects spending to rise further to 1.37 trillion dollars in 2028, but year-over-year growth to fall to 16%, below the previous forecast of 20%. This means spending will continue to expand, but at a slower pace.
Near-term investment remains supported by demand: Microsoft expects spending to accelerate in the second half of its 2027 fiscal year because of CPUs, GPUs and delayed third-party deliveries; Amazon, Alphabet and Meta have also guided to further increases in investment in 2027.

GF Securities expects free cash flow at the five largest cloud providers, except Microsoft, to remain under pressure and mostly negative by 2028. Amazon continues to make large investments, while Alphabet faces funding pressure from infrastructure and TPU construction.
Oracle expects free cash flow to turn positive only in the second half of fiscal 2028, exceeding 30 billion dollars in fiscal 2029; the company also expects fiscal 2027 through fiscal 2028 to be the peak period for capex, followed by a decline in fiscal 2029.
On 30 October 2026, S&P lowered Meta’s rating outlook from stable to negative and said its free cash flow could still be negative after 2028. GF Securities therefore incorporates cash flow, credit ratings and competition from Chinese large models into its spending forecast for 2028.

Bloomberg consensus estimates show that combined capex at the three emerging cloud providers SpaceX, CoreWeave and Nebius will rise from 36 billion dollars in 2025 to 352 billion dollars in 2027, then increase to 373 billion dollars in 2028, while year-over-year growth slows from 146% to 6%.
GF Securities believes access to funding is not currently the main issue, but financing will become more selective, favoring providers with greater scale and stronger capital positions. The firm is positive on SpaceX’s financing resilience, citing its Starlink business and about 40 billion dollars in GPU-related debt financing.
For other operators, the firm places greater emphasis on project-backed notes supported by cloud-provider order backlogs or Nvidia, as well as a higher proportion of convertible bonds or fixed-rate debt.

GF Securities slightly lowered its forecast for the global AI accelerator market in 2028 from 1.03 trillion dollars to 1.01 trillion dollars; its model puts the market at 689 billion dollars in 2027, with growth of about 46% still expected in 2028.
According to the firm’s forecast, the number of Google TPUs on a CoWoS production basis will fall from 8.8 million units in 2027 to 8.3 million units in 2028. Reasons include a downward revision to the forecast number of v9 units and a rapid increase in thermal design power per chip.
Because visibility into T4 tape-out progress is limited, the firm expects the total number of Amazon AWS custom chips to fall from 2.6 million units in 2027 to 2.1 million units in 2028.