Hyperscalers Boost AI Capex Plans to $2.45 Trillion, Canaccord Reports

A surge in planned spending on artificial intelligence infrastructure was a dominant theme during the second-quarter earnings season, with major technology firms boosting their future investment outlooks, according to a Monday report from Canaccord. The analysis found that capital expenditure plans for so-called "hyperscalers" for the 2025-2027 period rose from $2.25 trillion to $2.45 trillion.

AI Spending Dominates Earnings

The increased spending commitments on AI drew a mixed reaction from investors. Shares of Meta (META) and Alphabet (GOOGL) declined following their earnings reports as markets weighed the impact of higher spending, Canaccord noted. In contrast, Microsoft's (MSFT) spending strategy and Amazon's (AMZN) focus on growth and margin expansion were received more favorably.

The report comes as the Q2 earnings season progresses, with 79% of S&P 500 companies and 67% of Russell 2000 companies having reported. Canaccord highlighted that earnings estimate revisions for small-cap stocks rose 4%, outpacing the 3% increase for large-cap stocks. Revenue estimates for all reporting companies improved by 1% over the past three months.

Macroeconomic Context

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These corporate developments occurred against a backdrop of slowing economic growth and moderating inflation. Key economic indicators from the report include:

• Q2 GDP Growth: Slowed to 1.5%, missing the 2% consensus estimate.
• Headline PCE Inflation: Declined to 3.7% year-over-year.
• Core PCE Inflation: Rose to 3.3% on an annual basis.

The Federal Reserve held its benchmark interest rate steady in a 3.50% to 3.75% range at its July meeting, though three members voted for an increase. According to the report, Fed Chair Warsh reiterated the central bank's commitment to its 2% inflation target.