Analysts at Morgan Stanley project that by 2027, major hyperscale data center operators, including Alphabet (GOOG), Amazon.com (AMZN), Meta Platforms, Inc. (META), and Microsoft (MSFT), are expected to collectively add computing capacity totaling 34 gigawatts, as "the era of inference has arrived." For context, analysts note that Amazon Web Services, currently the largest cloud service provider, likely added only about 5 GW of computing capacity in its first 18 years of operation. Analysts further state that the industry is anticipated to add 20 GW of capacity next year, an amount of power generation that could meet the electricity needs of approximately 15 million U.S. households. Combined with an additional 14 GW projected for 2026, the industry's total new capacity would reach 34 GW. In their research report, analysts indicate that in 2027, Alphabet is still expected to lead the capacity expansion, adding roughly 7 GW; Amazon.com and Microsoft follow closely, each adding about 5 GW; Meta's capital expenditure corresponds to a capacity increase of 3.5 GW, though if its overall cloud infrastructure investment is fully accounted for, the actual new capacity could reach 4 GW. Analysts believe that a significant portion of the capital and capacity from this large-scale computing expansion will be directed toward the GPU sector. Leveraging its leading energy efficiency advantage over peers, NVIDIA (NVDA) is poised to benefit substantially in this arena. Analysts add that the remaining computing resources will primarily be allocated to the development of proprietary chips (such as Alphabet's TPU and Amazon's Trainium chips), power supply infrastructure, DRAM memory, high-bandwidth memory, and other supporting hardware. Looking ahead to 2026 and 2027, analysts consider Amazon.com, Microsoft, and Meta to be the most aggressive purchasers, as they are acquiring large quantities of servers, land, equipment, and memory. Analysts estimate that at least 50% of the capacity corresponding to these three companies' capital expenditures this year will not become operational until 2027 or later. In contrast, analysts note that only about 10% of the capacity linked to Alphabet's 2026 capital expenditures is expected to be delayed until 2027 or beyond.
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