Full-year free cash flow at Amazon, Alphabet, Meta and Microsoft is set to fall to its lowest level since 2014.
This decline reflects increasing pressures resulting from massive investments in artificial intelligence.
An AI spending spree is dragging down Big Tech’s cash flow
According to recent estimates from Morgan Stanley, companies specializing in hyperscaling include Amazon, Alphabet, Meta, Microsoft, and Oracle You can spend approx $805 billion this year, up from the previous forecast of $765 billion. The forecast for next year was also raised sharply to $1.1 trillion.
“To put that into perspective, their spending in 2026 alone will be roughly equal to what all non-technology companies in the S&P 500 combined spent in 2025. The projected $800 billion for 2026 is nearly double 2025 levels and about three times what was spent in 2024,” reporter Holger Schaepitz said. to publish.
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The aggressive push toward artificial intelligence is leaving These tech giants significantly Less money. Wall Street forecasts indicate that the combined free cash flow of Amazon, Alphabet, Microsoft and Meta could fall to about $4 billion in the third quarter. This represents a decline from the quarterly average of $45 billion since the Covid-19 pandemic.
“Full-year free cash flow is expected to reach the lowest level since 2014, when its revenue was about one-seventh its current size, according to analyst estimates compiled by Visible Alpha,” the Financial Times reported. I mentioned.
The report indicated that Amazon is expected to do so Spend more money than… Born this year. Visible Alpha estimates a cash burn of approximately $10 billion.
The company also announced plans to invest $200 billion in 2026, representing the largest spending commitment among its peers.
Also dead It is expected to “burn cash” in… The second half of the year. Over the past six months, the company has issued $55 billion in debt and halted stock buybacks.
Meanwhile, analysts expect free cash flow to remain positive for the full year, although at its weakest level in more than a decade. The company also refrained from buying back shares in the first quarter for the first time since it began the buyback program in 2015.
“After financing their investments largely from their income during the first few years of the AI boom, these tech giants face trade-offs more familiar to capital-intensive companies: cutting jobs, reducing shareholder returns, or borrowing to finance expansion,” the report added.
However, analysts see the pressure on cash flow as temporary. They expect higher AI-driven revenues to improve cash generation next year.
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