Morgan Stanley sees $3 trillion in AI investment through 2028

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Morgan Stanley’s Mapping AI’s Circularity note highlights the early stages of a massive investment cycle in artificial intelligence (AI), with global spending expected to approach $3 trillion by 2028.

The bank’s global tech team notes that this surge marks just the beginning of what could be a multi-year expansion in AI-related capital expenditures.

The report points out that hyperscale cloud providers are driving a significant portion of this growth. Purchase commitments have climbed to $330 billion, while leasing agreements now total roughly $340 billion, underscoring the scale and intensity of investment in the sector.

Morgan Stanley analysts emphasize that the AI ecosystem is becoming increasingly interconnected. As major players commit more capital, collaboration and integration among hardware providers, software developers, and cloud platforms are intensifying, creating a tightly woven network of dependencies.

Sustainability remains a focal point, with the bank’s strategists noting that the long-term viability of this investment cycle depends on AI delivering consistent cash flows. Their bottom-up analysis projects AI software revenue could reach $1.1 trillion by 2028, supported by standard software margins, indicating strong potential for returns on invested capital.

The report concludes that while AI spending is monumental, careful execution and revenue growth are key to maintaining momentum.

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