Raising Internet capex ests: A look into Internet capex, capacity and monetization

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Raising Internet capex ests: A look into Internet capex, capacity and monetization

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Raising Internet capex ests: A look into

Internet capex, capacity and monetization

Industry Overview

AI capex returns remain the top hyperscaler debate 07 July 2026

The biggest debate for the Internet hyperscaler stocks remains the return profile on AI Equity

capex spend, while biggest concern in 2Q results is that higher capex (and lower FCF United States

ests.) will overshadow strong revs. In our view, this concern has outweighed recent Justin Post

positive cloud pricing (Amazon) and capacity monetization data points. In this report, we Research Analyst

raise our capex estimates, translate capex into estimated data center GW capacity, and BofAS+1 415 676 3547

review monetization estimates on that capacity. We also conduct an internet hyperscaler justin.post@bofa.com

valuation analysis & list potential catalysts that could improve hyperscaler sentiment. Nitin Bansal, CFA

Research Analyst

BofASRaising capex estimates as hyperscalers prioritize capacity

+1 415 676 3551

Given the recent capital raise by Alphabet, reported server order increases by Amazon, nbansal7@bofa.com

LLM capacity use comments from Meta, and higher memory costs, we are raising our

sector capex estimates. For Alphabet, we now expect Capex of $195bn in 2026 (vs

$187bn previously), $290bn in 2027 (vs $257bn). For Meta, we expect Capex of $145bn

in 2026 (vs $130bn previously) and $185bn in 2027 (vs $157bn). For Amazon AWS

(excludes retail), we expect Capex of $159bn in 2026 (unchanged), $230bn in 2027 (vs

$196bn). (We will adjust our ests for related revenues & depreciation as additional June AI: Artificial Intelligence

advertising and Cloud data points come in.) FCF: Free Cash Flow