Big Tech AI Capex Nears $960 Billion in 2027, Threatening Credit Quality
Updated
Updated · CNBC · Aug 28
Big Tech AI Capex Nears $960 Billion in 2027, Threatening Credit Quality
3 articles · Updated · CNBC · Aug 28
Summary
S&P Global and Moody’s say hyperscalers’ AI buildout is starting to pressure balance sheets, with some companies moving closer to rating thresholds even as their core businesses remain strong.
Capital spending has outrun cash generation: Meta’s free cash flow fell 91%, Alphabet posted its first quarterly cash outflow since 2004, and Amazon also turned negative, while only Microsoft stayed solidly cash-flow positive.
FactSet estimates Amazon, Alphabet, Meta and Microsoft will spend about $960 billion on capex in 2027 against roughly $905 billion of operating cash flow, leaving Microsoft as the only one projected to have positive free cash flow.
That gap has pushed heavier borrowing and alternative financing, including Alphabet’s $25 billion note sale, Amazon’s roughly $25 billion July bond deal, and Meta’s $14 billion BlackRock-backed Texas data center venture.
Analysts say the real test comes by 2028: if AI revenue and cash-flow returns do not inflect as expected, today’s still-high ratings could face more serious downgrade pressure.