Morgan Stanley forecasts hyperscaler neocloud capex slowdown toward smart apps
Big changes are coming in the world of AI: Morgan Stanley predicts that by 2028 hyperscaler and neocloud capital expenditure growth will slow as the industry shifts gears toward building smart software and apps.
Year-on-year growth in hyperscaler and neocloud capital expenditure is expected to drop sharply, from 93% in 2026 to 61% in 2027 and 14% by 2028, as the industry shifts gears.
Power shortfall, $286B US data-centre setbacks
This switch isn't happening without bumps. There's a huge power shortage expected (about one-third less than needed), and local opposition has delayed or canceled $286 billion of US data-centre projects since 2025.
Still, early software makers could benefit big time. Plus, AI has already boosted productivity nearly 10%, and demand for computing power isn't slowing down anytime soon, even with these challenges.