Morgan Stanley: AI Inference Era Begins, Capital Expenditure Growth to Slow by 2028

Morgan Stanley reports that hyperscale data center capital expenditure will reach $1.5 trillion in 2027, a 60% year-over-year increase, before growth slows to 12% in 2028. AI compute capacity is projected to grow fourfold to 145 GW by 2028, with custom chips—led by Google TPU and Amazon Trainium—increasing their share to 66%. As hardware spending growth moderates, capital is expected to rotate toward software and enablement layers.