Big Tech's AI Spending—and Borrowing—Will Be Even Higher Next Year, Says Citi

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RegExp("[?&]notifications=1(&|#|$)");"desktop"===y&&i&&b.test(window.location.search)&&(i.checked=!0)};ge("ybar-mod-notification",(function(e){var t={isUH3:"crunch"===e.getConfig().ytheme,notifContainer:document.getElementById("notification-container"),notifBadge:document.getElementById("notif-badge"),notifMenu:document.getElementById("ybarNotificationMenu"),notifMenuOpener:document.querySelector("#ybarNotificationMenu + label"),notifDropdown:document.getElementById("notifDropdownContainer"),tooltipContainer:document.querySelector(".".concat($n)),notifLabel:document.querySelector(".".concat(Xn))};t.notifDropdown&&so(e,t)}))}()}};]]>Colin LaidleyWed, October 1, 2025 at 12:39 AM GMT+2 4 min readCitigroup analysts on Tuesday forecast hyperscalers would spend even more on AI infrastructure next year than previously expected.The AI data center buildout is increasingly being financed by debt rather than cash flows, an evolution that exposes the AI boom to new vulnerabilities like default and interest rate risk.Other financing methods, like the investment agreement announced by OpenAI and Nvidia last week, have worried some onlookers fearful of an AI bubble.After a series of big cloud computing deals this month, Citigroup analysts now expect AI spending to exceed their already eye-watering forecast.Citi analysts on Tuesday estimated that hyperscalers—including Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Oracle (ORCL), and CoreWeave (CRWV)—will spend $490 billion on infrastructure and other capital goods next year, up from a prior estimate of $420 billion. Citi’s forecasts are slightly above the Wall Street consensus.The AI infrastructure boom has been a major force behind U.S. stock market gains and economic growth in recent years. If tech companies rely on debt to fund their massive AI investments, they could expose the AI buildout—and the broader economy—to greater risk.The analysts pointed to an onslaught of announced partnerships, investments, and products in recent weeks as evidence of strong AI demand. They said their recent conversations with CIOs and CTOs at a range of companies “reflect a similar increase in urgency around adoption at the enterprise level.”Citi expects AI infrastructure providers like Nvidia (NVDA) to benefit from higher spending. As such, the firm’s analysts raised their price target on Nvidia shares to $210 from $200 on Tuesday. The hyperscalers are among the world’s largest, most profitable companies, a fact that has enabled them to increase their infrastructure spending exponentially over the past few years. But not even hugely profitable tech giants can undertake this level of investment on their own.“It is notable that we have gone from the cash flow funded stage of this investment cycle to the debt funded stage, with the incremental risks that come with it,” Citi’s analysts wrote.Oracle last week sold $18 billion of bonds in the second-largest U.S. debt deal this year, according to a Bloomberg report. Oracle, which has spent more than it's made in each of the last two quarters, is expected to use the debt to increase its cloud capacity so it can deliver on a five-year, $300 billion deal with OpenAI. Adding that much capacity will be expensive. Citi sees Oracle’s capital expenditures ballooning to $58 billion in fiscal year 2027, nearly three times what it spent in the fiscal year that ended in May.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,772.50 +11.00 (+0.16%)Dow Futures46,693.00 -32.00 (-0.07%)Nasdaq Futures25,108.50 +91.00 (+0.36%)Russell 2000 Futures2,469.90 +9.80 (+0.40%)VIX16.08 -0.21 (-1.29%)Gold3,906.20 +8.70 (+0.22%)PortfolioSign in to access your portfolioSign inTop gainersFLNC Fluence Energy, Inc. 13.45 +2.65 (+24.54%)MENS Jyong Biotech Ltd. 47.86 +8.48 (+21.53%)QS QuantumScape Corporation 14.59 +2.27 (+18.43%)AES The AES Corporation 15.37 +2.21 (+16.79%)ASTS AST SpaceMobile, Inc. 56.94 +7.86 (+16.01%)Top losersWIX Wix.com Ltd. 153.79 -23.84 (-13.42%)WOLF Wolfspeed, Inc. 24.83 -3.77 (-13.18%)RDDT Reddit, Inc. 202.60 -27.39 (-11.91%)SLNO Soleno Therapeutics, Inc. 60.12 -7.48 (-11.07%)CTVA Corteva, Inc. 61.47 -6.16 (-9.11%)Most activePLUG Plug Power Inc. 2.9300 +0.6000 (+25.75%)SNAP Snap Inc. 7.71 0.00 (0.00%)OPEN Opendoor Technologies Inc. 8.06 +0.09 (+1.13%)NVDA NVIDIA Corporation 187.24 +0.67 (+0.36%)INTC Intel Corporation 35.94 +2.39 (+7.12%)Earnings eventsMy earnings eventsEarnings eventsTrending tickersSMCI Super Micro Computer, Inc. 52.39 +4.45 (+9.28%)BABA Alibaba Group Holding Limited 182.78 +4.05 (+2.27%)FRMI Fermi Inc. 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