By Tae Kim
June 26, 2025
New Street analyst Pierre Ferragu is optimistic the hundreds of billions spent annually by large technologies companies for artificial-intelligence infrastructure will pay off for the industry.
The analyst estimates the top four major data center technology companies— Alphabet GOOGL -0.20%, Amazon AMZN +0.85%, META +0.37%, Microsoft MSFT -0.46% —will grow total capital expenditures to $1.7 trillion by 2035 from $253 billion last year.
He notes how Microsoft Azure and Taiwan Semiconductor Manufacturing’s early investments in cloud computing and chip equipment, respectively, were justified, leading to strong revenue growth in the subsequent years. Ferragu expects similar results for AI infrastructure.
“More capital put into the ground always eventually means more revenues to come at least in a good business,” Ferragu said in a note to clients Thursday. Investing in “more capex is normally a good thing, driving growth, increased productivity, and expanding margins.”
Ferragu said AI is still in its early stages and has a lot of runway for growth. He cited how ChatGPT has 600 million users, according to his estimates, versus total internet users at 5.5 billion. The analyst also said the AI chatbot is used 18 minutes a day versus the 400 minutes of daily screen time. More gains are likely in the future.
“AI infrastructure demand is consistently exceeding available capacity,” he said. As AI computing comes down, new innovation and new applications will be invented similar to what happened with advent of the microprocessor, he added.
Nvidia NVDA +0.96% has been the largest beneficiary from the investment in AI infrastructure.