Citi has revised its artificial intelligence revenue projections higher through 2028, pointing to stronger demand for AI-powered services and increasing commercial adoption among leading technology companies.
The bank raised its AI service revenue estimates by 9% for 2026, 7% for 2027 and 17% for 2028, following accelerating growth across major cloud platforms.
Combined third-quarter revenue at AWS, Meta Platforms (NASDAQ:META), Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) increased 25% from a year earlier.
Growth in cloud revenue among the three largest providers accelerated to 56% year over year, compared with 48% in the preceding quarter and 39% during the first quarter.
Enterprise AI Usage Expands Across Major Platforms
Amazon (NASDAQ:AMZN) indicated that AWS revenue growth could exceed 40% in fiscal 2027 and 2028, supported by continued demand for computing infrastructure.
Google Cloud Platform reported an increase in customers consuming more than 100 billion tokens over a 12-month period, reaching 2,600 compared with 2,000 in the second quarter.
Microsoft reported that customers using consumption-based billing for Microsoft 365 Copilot increased by more than 75% quarter over quarter.
Meanwhile, AWS spending by Fortune 500 companies rose nearly sevenfold year over year, highlighting the expanding use of cloud infrastructure among major enterprises.
The developments suggest that businesses are increasingly incorporating AI services into their operations, supporting revenue growth across cloud platforms.
Contract Backlogs Grow Despite Quarterly Slowdown
Citi noted that new backlog additions among hyperscalers slowed during the third quarter, even as overall contracted demand remained elevated.
Combined quarterly backlog additions totalled $128 billion, down from $237 billion in the second quarter.
Hyperscaler backlogs expanded 142% compared with the previous year, although the annual growth rate eased by nine percentage points against a comparison base that was 14 percentage points tougher.
Microsoft’s commercial bookings declined 11% in constant currency, partly because the previous year’s results included substantial Azure commitments.
The slowdown in new backlog additions contrasted with strong cloud revenue growth, suggesting that demand remained significant even as the pace of new contractual commitments moderated.
Citi Projects Sharp Increase in AI Capital Expenditure
Citi expects worldwide capital spending on artificial intelligence to reach $1.68 trillion in 2027, representing growth of 64% compared with 2026.
Approximately 64% of the total investment is expected to come from the four largest hyperscalers, reflecting their central role in expanding global AI computing capacity.
SpaceX (NASDAQ:SPCX) increased its targeted computing capacity for the end of 2027 to approximately 13 gigawatts, above its previous range of 5 to 10 gigawatts.
The company also outlined a target of approximately 20 gigawatts of supporting power infrastructure.
The higher capacity projections underline the substantial computing and electricity requirements associated with the next phase of AI development.
Stronger Monetisation Underpins Citi’s Revised Forecasts
Citi’s higher revenue estimates indicate growing confidence in the ability of major cloud providers to generate additional sales from artificial intelligence services.
Accelerating cloud revenue, increased enterprise adoption and large infrastructure investment plans remain key factors supporting the outlook.
However, the moderation in quarterly backlog additions highlights the importance of monitoring whether demand growth can keep pace with expanding infrastructure capacity.
Investors will continue assessing the relationship between AI spending, commercial adoption and profitability as technology companies pursue further expansion through 2028.
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