Citi Lifts AI Revenue Forecasts as Cloud Demand Keeps Accelerating

Citi has raised its forecasts for artificial intelligence service revenue through 2028, betting that demand for AI services and the cloud infrastructure behind them will keep expanding faster than it previously expected.

The investment bank lifted its AI revenue estimates by 9% for 2026, 7% for 2027 and 17% for 2028, according to a report published on InvestorsHub ADVFN. The upgrades reflect stronger monetisation of AI services across the major cloud computing providers and sustained enterprise appetite for the technology.

Cloud growth is running hot

The numbers behind the upgrade are striking. Combined revenue growth at Amazon Web Services, Meta, Google and Microsoft accelerated to 25% year over year in the third quarter, the report said. Cloud revenue growth among the three largest providers reached 56%, up from 48% in the second quarter and 39% in the first.

Individual providers are reporting rapid adoption. Amazon projected AWS revenue growth of more than 40% in both fiscal 2027 and 2028. Google Cloud said 2,600 customers consumed more than 100 billion tokens over the preceding 12 months, up from 2,000 customers in the second quarter. Microsoft reported that the number of Microsoft 365 Copilot customers using consumption-based billing rose more than 75% quarter over quarter. Spending by Fortune 500 companies on AWS increased nearly sevenfold compared with the previous year.

Backlogs are huge, but new orders cooled

Citi also flagged a note of caution. Although AI demand remained strong, new backlog additions among major cloud providers moderated. Combined quarterly backlog additions fell to $128 billion from $237 billion in the second quarter, according to the report.

Even so, total hyperscaler backlogs rose 142% year over year. Microsoft's commercial bookings fell 11% in constant currency, partly because of unusually large Azure commitments recorded in the previous year, the report said. The picture is one of enormous contracted demand, even if the pace of fresh commitments has eased.

A $1.68 trillion spending wave

Looking ahead, Citi forecasts worldwide AI capital expenditure of $1.68 trillion in calendar 2027, a 64% increase from 2026. The four largest hyperscalers are expected to account for about 64% of that total, underscoring how concentrated the infrastructure buildout has become.

SpaceX also raised its year-end 2027 computing capacity target to about 13 gigawatts, up from a previous projection of 5 to 10 gigawatts, and is targeting around 20 gigawatts of supporting power infrastructure, according to the report.

The message from Citi is that the AI infrastructure boom is far from over — but investors will be watching whether the big technology companies can convert their swelling order books and heavy spending into sustained revenue growth and improved profitability.

Written by the BidAsk Newsroom. Based on reporting from the sources below.