Big Tech’s AI Spend to Hit $2.8T by 2029, Citi Says

- Citigroup raises AI capex forecast to $2.8 trillion by 2029. - Funding pressures and soaring energy needs spark investor concerns. According to a report from Citigroup on September 30, 2025, Big Tech AI investments are now projected to exceed $2.8 trillion by 2029, citing growing enterprise demand and hyperscaler expansion as key drivers. The revised forecast reflects aggressive spending on AI infrastructure by Amazon, Alphabet, and Microsoft, and it also accounts for the wider adoption of AI services across industries. The updated estimate marks a sharp increase from Citigroup's earlier $2.3 trillion projection, as the bank now expects large data center operators will spend $490 billion on AI-related capital expenditures by the end of 2026. This figure is up from the previous forecast of $420 billion, a boost driven largely by the construction of advanced AI computing infrastructure. In addition, Citigroup’s report highlights the immense energy demand required to scale AI systems, predicting that handling the surge in computational workload will require roughly 55 gigawatts of new energy capacity by 2030. This energy requirement contributes to the bank's upward revision, with the U.S. alone expected to account for $1.4 trillion of the total projected investment. To support this unprecedented spending wave, Big Tech companies are increasingly relying on borrowing in addition to reinvesting profits, with costs averaging $50 billion per gigawatt of compute capacity. As a result, this financial strain has begun to affect their free cash flow, prompting some investors to question the sustainability of this capital-intensive growth strategy. While Citigroup maintains an optimistic near-term outlook, its forecast diverges from a more cautious assessment issued by Goldman Sachs earlier in September. Goldman Sachs predicted a slowdown in AI-related capital expenditure growth starting in Q4 2025 and extending into 2026. However, despite acknowledging hurdles such as funding and energy constraints, Citigroup remains bullish on the pace of AI infrastructure development in the coming years.