AI infrastructure investment 2027 is expected to exceed $1 trillion as major technology companies expand computing capacity to meet rising demand, according to a UBS report.
The report estimates that AI-related capital expenditure by major technology companies will surpass $600 billion in 2026 before crossing the $1 trillion mark in 2027.
UBS said demand for computing power had exceeded available capacity earlier than anticipated. Technology companies have consequently increased their investment plans to expand infrastructure and support growing artificial intelligence workloads.
However, the spending surge is also creating financing pressures as companies commit more capital to data centres and related infrastructure.
AI infrastructure spending boosts US economic growth
Investment in AI infrastructure has become a significant contributor to US economic growth, according to UBS.
The report estimates that AI infrastructure spending added around 0.75 percentage points to US gross domestic product growth in the first half of 2026.
Rising equity prices linked to AI companies also supported household wealth and consumption, providing an additional boost to economic activity.
However, UBS expects the pace of investment growth could peak in 2027 as higher capital expenditure puts pressure on corporate cash flows and increases financing requirements.
The report also noted that evidence of AI-driven productivity gains and widespread job displacement remains limited.
Its estimated impact on the overall US unemployment rate stands at around 0.2 percentage points or less.
Employment trends vary across industries. Jobs in selected high-technology sectors, including software and computer systems design, declined 1.4 per cent year-on-year. In contrast, employment in construction industries supporting data centre infrastructure grew by nearly 3 per cent.
Technology companies face rising AI financing needs
UBS flagged weakening cash flows at major technology companies as spending on AI infrastructure increases. Demand for their bond issuances has also become less robust, adding to concerns about how the investment cycle will be financed.
Investors expect free cash flow to return to positive territory in 2028, according to the report. This outlook depends on companies generating sufficient revenue from AI services to offset their infrastructure spending.
The scale of planned investment raises questions about the financial returns technology companies will achieve from expanding computing capacity.
Sustained demand for AI services and the ability to monetise infrastructure will be important factors in determining whether companies can maintain spending without prolonged pressure on their balance sheets.
AI demand creates price pressures, UBS says
The report also identified price increases in some areas linked to AI demand, including software, digital goods and electricity.
While productivity improvements could help reduce inflation over time, the immediate effects of infrastructure expansion may put pressure on costs in certain sectors.
UBS said the outlook for the AI investment cycle will depend on whether demand continues to exceed available computing capacity and whether technology companies can convert their investments into sustainable revenue growth.
The projected rise in spending to more than $1 trillion in 2027 underscores the scale of the infrastructure buildout. Its longer-term economic impact will depend on how effectively companies translate that investment into productivity gains and commercial returns.
