Rs 731 trn to be pumped in AI by 2030: Is it a bubble? Check this UBS Global Research report

The world's largest tech companies are poised to invest heavily in AI (artificial intelligence). Between 2026 and 2030, six large hyperscale companies could spend a total of $7.7 trillion (₹731 lakh crore) on AI infrastructure. Approximately $6.8 trillion of this investment will be in addition to the capital expenditures that were typical for these companies before the AI ​​boom.

Kolkata: The world’s largest tech companies are poised to invest heavily in AI (artificial intelligence). Between 2026 and 2030, six large hyperscale companies could spend a total of $7.7 trillion (₹731 lakh crore) on AI infrastructure. Approximately $6.8 trillion of this investment will be in addition to the capital expenditures that were typical for these companies before the AI ​​boom. According to UBS Global Research, this massive investment also poses a significant challenge in increasing earnings. Estimates suggest that to achieve a 15% return on investment by 2031, these companies will need to increase their earnings before interest and taxes (EBIT) by approximately $1 trillion. Considering current cloud business margins, this would require generating approximately $3.4 trillion in additional revenue. Therefore, the question now is not only how much demand for AI will grow, but also how effectively companies will be able to convert this demand into earnings.

Gap between spending on and earning from AI

According to UBS , hyperscale companies have historically generated pre-tax returns of over 40% from asset-light businesses like software, social media, and e-commerce. However, AI is changing this business model. AI infrastructure requires massive data centers, computing capacity, and other facilities, making these companies’ businesses more capital-intensive than before.

UBS expects that the increasing share of AI in companies’ businesses could lead to a 20 to 25 percentage point decline in ROIC.........

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