With the handwringing among the Chicken Little Brigade reaching epic proportions over AI spending, the reality is that even as the four hyperscalers pour almost $700 billion into Capex this year, their combined backlog of future contracted business will blow past $2.5 trillion by year’s end.
Yes, I get it about the business world never having seen surging levels of CapEx investment such as we’re witnessing now from Amazon ($77.3 billion last quarter), Alphabet ($51.4 billion), Microsoft ($45.2 billion), and Oracle ($28.5 billion). And yes, I understand that a certain level of scrutiny needs to be applied when the combined calendar-year CapEx for those four world-shaping company approaches $700 billion, with Amazon guiding to about $220 billion, Alphabet about $200 billion, Microsoft $170 billion, and Oracle about $90 billion.
But, I also think that too many people are spending far too much time and worry on the unprecedented buildout spending rather than on the hard-to-fathom growth opportunities looming in the very near future for those hyperscalers:
| Hyperscaler | RPO / Backlog | As of |
|---|---|---|
| Microsoft | $667 billion | Sept. 30, 2026 |
| Oracle | $664 billion | Aug. 31, 2026 |
| AWS | $578 billion | Sept. 30, 2026 |
| Google Cloud | $561 billion | Sept. 30, 2026 |
| TOTAL | $2.47 trillion |
And, those RPO/backlog totals are rising rapidly with the exception of Microsoft, whose RPO declined by $1 billion from the previous quarter’s $668 billion. AWS led the RPO/backlog Q3 surge by rising $84 billion over its Q2 total, while Google Cloud’s backlog rose by $47 billion quarter-to-quarter and Oracle rose by $26 billion.
So, for calendar Q4, I think we can confidently expect the combined RPO/backlog total to approach or exceed $2.5 trillion by the end of the year.
CapEx Spending Will Continue to Rise
Alphabet said that for fiscal 2027, it expects its 2026 CapEx total of about $200 billion to “increase significantly,” and Amazon CEO Andy Jassy was fairly exuberant as he forecast higher CapEx spending in the coming year because those outlays are in pursuit of spectacular growth opportunities that could dwarf what we’ve seen so far.
And just how spectacular might that be? Well, on Amazon’s Q3 earnings call, Jassy said on a few occasions that he expects AWS to reach $1 trillion in annual revenue within the next five to 10 years!
Sundar Pichai, CEO of Google Cloud parent Alphabet, cited the explosive growth of Google Cloud in Q3 — revenue up 103% — as evidence for his continued willingness to aggressively fund the infrastructure buildout powering that remarkable acceleration.
And, while not nearly as big as the other hyperscalers, Oracle Cloud Infrastructure grew 121% last quarter with forecasts for more growth at or near those levels to come.
Final Thought
On the way to building and fulfilling the greatest growth market the world has ever known, the Cloud Wars Top 10 companies are also:
- forging wide-ranging innovations in the energy and construction industries and pioneering new water-conservation methods;
- creating new business models that give customers more choices, more options, and more flexibility; and
- fueling an accelerated pace of business innovation across all industries that is raising or will soon raise the quality of life for billions of people across the planet.
Perhaps in time some of the Chicken Little Brigade will come to realize that while there’s always a place for thoughtful deliberation and financial rigor, there’s also a point at which too much of all that leads to missed opportunities and rapidly scaling irrelevance.
