Morgan Stanley Projects $1.4T AI Capex by Tech Giants Could Yield 25-50% Returns

According to Morgan Stanley, tech hyperscalers including Amazon, Alphabet, and Microsoft are projected to achieve 25%-50% Return on Invested Capital (ROIC) from their combined $1.4 trillion AI infrastructure spending, according to a new research report led by analyst Brian Nowak. The firm outlined three revenue drivers: GPU rental services (projected 60%-70% EBIT margins and 25%-40% ROIC), model-enabled APIs (approximately 25% ROIC), and third-party infrastructure deployment.

While Morgan Stanley maintains a bullish long-term outlook on capital efficiency, Wall Street has reacted with skepticism. Alphabet and Meta shares have declined 16% and 8% respectively year-to-date amid concerns over capex returns, though the report concludes scarcity value of AI computing infrastructure and high operational leverage will deliver strong long-term shareholder value.