Artificial Intelligence: ROI on AI: Consensus Is Still Underestimating AI Revenues & Returns

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Artificial Intelligence: ROI on AI: Consensus Is Still Underestimating AI Revenues & Returns

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04 Aug 2026 04:30:49 ET │ 13 pages

Artificial Intelligence

ROI on AI: Consensus Is Still Underestimating AI Revenues & Returns

CITI'S TAKE

Heath Terry AC

Hyperscaler cloud revenue accelerated to +48% in 2Q from +39% in 1Q, with +1-212-723-4624

collective backlog also accelerating to +151% vs. +143% last Q, reflecting the heath.terry@citi.com

continued acceleration in enterprise adoption. CROCI over the last 12

months was relatively steady at 28% vs. 29% in 1Q. Despite this, consensus Shelby Spencer

continues to underestimate future revenue growth & profitability tied to AI. +1-212-816-0416

The math is simple: CapEx + Time = Profits. Accounting for the acceleration shelby.spencer@citi.com

in CapEx in ’24 and beyond, we estimate that consensus continues to

underestimate revenue growth by +500bps for ’27 and +900bps for ’28. Ashley Kim

With demand continuing to outstrip supply, we expect CapEx will continue +1-212-816-6689

to grow as much as constraints allow, driving outperformance across the ashley.kim@citi.com

infrastructure, compute, applications, and end users leveraged to AI.

Janna Withrow

Returns. Despite accelerating CapEx growth, Cash Returns on Cash Invested across +1-212-723-0439

the hyperscalers was 28% in 2Q, essentially flat with 1Q despite the increase in janna.withrow@citi.com

inventories at Alphabet related to TPU sales. Returns are benefiting from higher

compute prices driven by strong AI demand (e.g., nearly 500 GCP customers

consuming 1-trillion tokens and >2K enterprises consuming >100 billion tokens over

the last year, Microsoft’s 30 million paid M365 Copilot seats, Amazon’s >$25B AI