Morgan Stanley: AI Inference Era Begins, CapEx to Slow in 2028, Funds Shift to Software Layer

According to TrendForward research, a Morgan Stanley research report dated September 4, 2026, indicates that hyperscaler data center capital expenditures will reach $1.5 trillion in 2027, a 60% year-over-year increase, before the growth rate drops sharply to 12% in 2028. Total AI compute capacity is expected to expand from 35 gigawatts in 2025 to 145 gigawatts in 2028, representing a fourfold increase. Custom chips will capture a growing share of incremental capacity, rising from 34% to 66%, driven primarily by Google TPUs and Amazon Trainium. GenAI returns on investment range between 25% and 50%, with the model layer delivering the highest returns by running APIs on proprietary infrastructure (approximately 46%). Approximately 25% of S&P 500 companies have quantified GenAI returns, up from 14% a year ago.