10-13-2025 
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Spending on artificial intelligence (AI) infrastructure will hit $2.8 trillion over the next four years, a new report by Citi (NASDAQ: C) has revealed. The report pointed to accelerated investment by American tech giants over the past three years, which it projects will continue, amid concerns from industry experts that the spending may not pay off for the majority of the companies.
Earlier this year, Citi predicted that AI spending would hit $2.3 trillion by the end of 2029. It has revised its projections, citing a growing appetite for enterprise AI and aggressive spending by American tech giants.
By the end of next year, these hyperscalers are expected to spend $490 billion, up from Citi’s earlier estimate of $420 billion. The bank says that these companies believe their AI ambitions have been limited by constraints in their data center capacity over the past three years.
According to the Citi report, most tech giants are expected to reveal grand AI ambitions in their Q3 earnings calls, scheduled for later this month. Citi’s analysts expect every other tech company to announce massive spending on AI infrastructure with a view to “building ahead of visible enterprise demand.”
Meta (NASDAQ: META) is among the companies expected to lead in AI spending. The social media behemoth is in a race to corner the market through open-source AI models. CEO Mark Zuckerberg stated at a recent White House event that Meta expects to invest at least $600 billion in the United States alone over the next three years, although the company later clarified that the budget wouldn’t be limited to AI.
Debt-backed spending and lofty ambitions
For most tech giants, spending on AI infrastructure is so critical that they are ready to burn through their cash reserves and take on substantial debt.
In a note this week, analysts from Goldman Sachs (NASDAQ: GS) revealed that tech giants have raised $141 billion through debt securities in the first nine months of the year, surpassing the $127 billion they borrowed in the whole of 2024.
Goldman says the spike in borrowing to support the grand AI ambitions is drastically reducing the quality of corporate credit.
“While not yet a cause for alarm, given both the high cashflow generation and low leverage among large tech companies, the shifting funding mix of capex beyond cash is worth monitoring,” said the investment bank.
Worryingly, industry leaders have acknowledged that much of the spending is going into questionable pursuits. Speaking recently, Amazon’s (NASDAQ: AMZN) Jeff Bezos said that in booms like the one we’re experiencing, “every experiment gets funded, every company gets funded, the good ideas and the bad ideas.”
Bezos likened what’s happening today to the biotech bubble of the ‘90s and the dot-com bubble at the turn of the century; while a lot of money was lost, “we did get a couple of lifesaving drugs” and are still benefitting from dozens of dot-com inventions.Will the AI spending pay off?
Amid the sharp spike in AI spending, investors and analysts are now asking the question: Will it ever pay off?
Some, like Bezos, believe it will, but only for a few companies, as happened in the dot-com and biotech bubbles. Others, like Meta CEO Mark Zuckerberg, say it could take up to five decades for the spenders to record a return. And yet, “we’re all investing as if it’s not going to take 50 years,” he stated.
However, financial experts are sounding the alarm. In a recent note to investors, Deutsche Bank (NASDAQ: DB) stated that capital expenditure on AI is so massive that it’s almost singlehandedly preventing a collapse of the U.S. economy.
“AI machines—in quite a literal sense—appear to be saving the U.S. economy right now. In the absence of tech-related spending, the U.S. would be close to, or in, recession this year,” the bank wrote.
Bain & Co. concurs, noting that to fund the computing power needed to keep up with the expected AI demand by 2030, tech firms would need to generate $2 trillion in annual revenue over the next five years. This exceeds the revenue generated by the six largest US companies—NVIDIA (NASDAQ: NVDA), Microsoft, Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOGL), Amazon, and Meta—last year.
“However, even with AI-related savings, the world is still $800 billion short to keep pace with demand,” the company said in its Global Technology Report.
Revenue from AI products is unlikely to cover the spending; last year, these products only generated $45 billion from a combination of subscription fees and data center revenue. Bernstein says that while AI use has skyrocketed, the vast majority still use the free versions of the AI tools.
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