Is this another tech bubble?
Not quite. While the scale of investment is drawing comparisons to the dotcom era, today’s datacentre giants, known as hyperscalers, are in a much stronger financial position. These large cloud computing service providers, including Amazon Web Services, Microsoft Azure and Google Cloud, are investing billions in artificial intelligence (AI) infrastructure. But unlike the telcos of the 1990s, which borrowed heavily to build the internet, hyperscalers are funding growth with strong cash flow and healthy profit margins.
“Telecommunication companies from the late 90s borrowed heavily to invest in the internet, and they didn't even have profitable business structures. This time around, hyperscalers are starting from a much stronger position, and they're already monetising AI as it grows,” CBA International Economist Samara Hammoud said.
“This is a structural shift in how tech firms invest.”
What are hyperscalers spending on?
Most of the money is going into capital expenditure, or capex, which means long-term investments in physical and digital infrastructure. That includes building massive data centres to power AI models, upgrading cloud networks, buying high-performance chips, and expanding server capacity. Hyperscalers are also investing in software development and tools that help businesses and consumers use AI more easily.
McKinsey estimates global data centre investment could reach US$7 trillion by 2030, equivalent to almost a third of the entire US economy.
