Goldman Sachs says hyperscalers could be allocating nearly 98% of their operating cash flow to capital expenditures by 2026, with spending centered on data center capacity, compute infrastructure, networking equipment, and specialized AI hardware. The projected ratio puts current investment behavior close to the extremes seen during the early internet buildout.
Capex ratios are climbing at unusual speed
The historical change is sharp. Hyperscalers spent roughly 30% to 40% of operating cash flow on capital expenditures between 2015 and 2018. That figure rose to 55% in 2023. Goldman Sachs now projects 68% in 2025 and an eye-catching 98% in 2026, suggesting that almost all internally generated cash could be recycled into expansion.
The firm’s chart places that trend against earlier infrastructure booms. Telecom companies during the early 2000s race went above 120%, while the broader technology, media, and telecommunications sector peaked at about 95%. By that comparison, AI-related spending is approaching levels associated with one of the most aggressive investment cycles in the sector’s history.
Data centers, GPUs and networking remain the core focus
The spending surge is tied to demand for AI computing power. Companies are expanding data centers and continuing to buy large volumes of GPUs and networking hardware to support advanced models. Global Markets Investor also noted that major technology companies may soon direct nearly all generated cash toward new infrastructure buildouts, a shift that has drawn close attention from market watchers.
Goldman Sachs estimates that total technology industry capital investment could reach nearly $920 billion by 2027. In a more aggressive scenario, that figure could rise to $1.4 trillion. The report says this would mark an 89% jump over average 2026 projections, showing how large the current build cycle could become.
The return question is becoming harder to ignore
As spending rises, scrutiny is rising with it. Companies using AI tools are asking whether these infrastructure costs are being matched by adequate revenue gains. The question is simple now: can top-line growth keep pace with capex growth.
There is also pressure from intensifying price competition among model developers. Goldman Sachs says hyperscaler investment levels are already well above historical averages and moving closer to the 100% threshold. That implies operating cash could be directed overwhelmingly toward growth initiatives rather than shareholder distributions or other corporate uses, leaving the market focused on whether the financial payoff can keep up with the scale of reinvestment.