Investing.com -- Growing capital expenditures (capex) for cloud infrastructure are expected to “bolster the bull case for AI/cloud capex stocks,” according to Morgan Stanley (NYSE:MS) analysts.
In a note published Friday, the Wall Street firm discussed Amazon’s latest capex guidance, which suggests that cloud capex could exceed $350 billion in 2025, marking a 32% year-over-year increase and outpacing Morgan Stanley’s earlier forecast by 3 percentage points.
The updated forecast comes after Amazon (NASDAQ:AMZN)’s implied calendar year 2025 (CY25) capex guide of approximately $105 billion, which is significantly higher than consensus estimates and represents an estimated 27% year-over-year growth.
This figure was deduced from Amazon’s fourth-quarter capex of $26.3 billion, which the company indicated would be "reasonably representative" of its 2025 capital investment rate.
Morgan Stanley’s revised tracker now indicates $353 billion in cloud capex for 2025, a 32% growth from the previous year. This adjustment follows not only Amazon’s guidance but also Google owner Alphabet’s (NASDAQ:GOOGL) stronger-than-expected capex guidance earlier in the week. The current projection is 11 points or $38 billion higher than what was estimated just 10 days prior.
“Qualitative commentary from Amazon echoes what we’ve heard from the rest of the big 4 US hyperscalers this earnings season - they are investing to support the growing need for technology infrastructure, primarily as it relates to AWS and to support demand for AI services,” Morgan Stanley analysts led by Erik W. Woodring noted.
This points to an “extremely robust” demand for compute and data center infrastructure, analysts added.
“Even off a record 54% Y/Y growth in CY24, 32% Y/Y capex growth in 2025 now implies the second strongest year of capex growth in over half a decade,” they concluded.