Citi raises AI revenue forecasts and sees $1.68 trillion in spending in 2027

Citi is raising its expectations for AI service revenue through 2028, betting that stronger cloud demand and enterprise adoption will sustain growth. The bank also forecasts $1.68 trillion in worldwide AI capital spending in 2027. Its outlook pairs faster revenue growth with a counterweight: a quarterly decline in new cloud commitments.

The bank increased its AI service revenue estimates by 9% for 2026, 7% for 2027 and 17% for 2028, according to Fiona Craig’s InvestorsHub article published November 7. Those figures describe increases to Citi’s previous estimates, not the annual growth rates it expects AI services to achieve. The largest revision applies to the furthest year in its forecast.

Revenue and usage point upward

Cloud revenue growth among the three largest providers reached 56% year over year in the third quarter, up from 48% in the second quarter and 39% in the first. That sequence provides the clearest revenue-based support for Citi’s upgrade: growth accelerated across successive quarters rather than merely remaining high.

Enterprise adoption supplies another part of the case. The customer figures track different kinds of activity, so they should not be treated as a common measure of AI sales. One counts customers passing a usage threshold; the other counts customers using a particular billing arrangement.

• Google Cloud reported 2,600 customers consuming more than 100 billion tokens over a 12-month period, compared with 2,000 in the second quarter. Tokens are the units used to measure the text AI systems process.
• Microsoft said the number of Microsoft 365 Copilot customers using consumption-based billing increased more than 75% quarter over quarter. That measures the customer count for usage-based billing, rather than a 75% increase in Copilot revenue.

New cloud commitments eased

Quarterly backlog additions

$237 billion→$128 billion

billion dollars

Combined additions to major cloud providers’ contracted future business fell between the second and third quarters.

A smaller flow into a larger backlog

The less bullish signal concerns backlog: contracted business that has not yet become revenue. Citi identified a decline in quarterly additions to that pipeline, from $237 billion to $128 billion. This measures the flow of new commitments, not the size of the existing backlog, and does not mean that cloud providers’ contracted business shrank overall.

Total backlogs at the largest cloud operators rose 142% from a year earlier. Their annual growth rate nevertheless eased by nine percentage points. New commitments slowed even as the total stock of contracted business remained much larger than a year earlier. Both observations belong in the assessment of demand; neither cancels out the other.

Microsoft’s commercial bookings also declined 11% in constant currency, a measure that removes exchange-rate changes. Unusually large Azure commitments in the previous year partly explained that decline. The comparison therefore includes a specific year-earlier hurdle, rather than offering an unqualified signal that customers are pulling back.

The spending forecast remains steep

Citi’s capital-spending forecast calls for a 64% worldwide increase in 2027 from 2026. It expects the four largest cloud operators to account for approximately 64% of the total, according to InvestorsHub’s account of the outlook. The identical percentages describe different things: the annual rate of spending growth and the leading operators’ share of investment.