Global hyperscale CapEx estimates have risen to $851 billion for CY26 (+78% YoY) and $1.15 trillion for CY27 (+35% YoY), a sharp increase from BofA's post-Q1 May outlook. This historic spending is backed by over $2 trillion in collective Remaining Performance Obligations (RPO) and backlog across top Cloud Service Providers (CSPs), including a $250 billion OpenAI contract with Microsoft. Aggregate hyperscaler Free Cash Flow (FCF) margins are expected to dip into negative territory (-1% in CY26, -5% in CY27, -4% in CY28) due to the aggressive infrastructure buildout.
Hyperscalers are committing unprecedented capital to AI infrastructure, squeezing free cash flow to meet demand, which will tighten compute supply for years.