T. Rowe Price Manager Forecasts $1.6 Trillion AI Spending

Dom Rizzo, a global technology equity fund manager at T. Rowe Price, forecasts that AI capital expenditure from hyperscalers could reach between $1.5 trillion and $1.6 trillion in 2027. This projection exceeds estimates previously issued by Bank of America and Morgan Stanley.

Rizzo argues that current AI spending differs from the 1998 dot-com bubble because it is supported by strong revenue growth forecasts and appealing returns on invested capital. He identifies hyperscalers including Amazon, Alphabet, and Microsoft as being at an inflection point and expects them to accelerate their spending.

While Rizzo anticipates that frontier model labs such as OpenAI and Anthropic will capture the majority of the value, he warns that traditional software-as-a-service companies face potential disintermediation. In the short term, he expects the chip ecosystem to benefit, specifically logic semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Company, Samsung, and Intel.