Morgan Stanley points out that the combined return on incremental invested capital (ROIIC) for major hyperscale cloud vendors such as Amazon, Alphabet, Microsoft, Meta, and Oracle is expected to bottom out in the third quarter of 2027, falling to approximately 23%. Market consensus anticipates that this metric will steadily recover after bottoming out, rebounding to approximately 35% by 2030.
The core implication is that the current large-scale capital expenditures on AI data centers and computing infrastructure may temporarily suppress the return on new capital in the coming years, but market consensus does not believe this pressure will be long-term. As AI-related investments gradually translate into revenue and profit, the ROIIC for hyperscale cloud vendors is expected to improve again after 2027.
