Pershing Square argues that Wall Street may be underestimating the long-term payoff from the large AI spending programs at Microsoft, Meta, Amazon and Alphabet. The firm estimates the four could spend a combined $740 billion on capital expenditures in 2026, up from roughly $140 billion in 2023, with consensus pointing to more than $1 trillion in 2027; it says much of this spending is offensive, aimed at expanding cloud demand, improving advertising, accelerating software adoption and creating new AI products. Its math puts one gigawatt of AI data-center capacity at $40 billion to $50 billion, generating $15 billion to $20 billion in annual revenue and $7.5 billion to $10 billion in incremental operating income, a 15% to 25% pre-tax return on invested capital. If these assumptions hold, annual hyperscaler revenue growth could exceed consensus by 5 to 10 percentage points through 2029, leaving revenue 15% to 35% above today's estimates after three years. The firm already points to signs of monetization, including stronger AWS growth, AI-driven advertising gains at Meta, and opportunities across Azure, Copilot and GitHub.
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MSFT
• NeutralMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 11/02/2026 | 507.12 |
| Change that session | -2.83% |
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