S&P Global Ratings projects AI infrastructure spending by top hyperscalers will exceed $1.3 trillion by 2027. The six largest companies are expected to have negative free cash flow through 2027.
Recovery is not projected until 2029.
The report covers Alphabet, Amazon, Microsoft, Meta, Oracle, and SpaceX.
What happened
S&P Global Ratings published a report projecting that combined capital expenditure by the six largest hyperscalers — Alphabet, Amazon, Microsoft, Meta, Oracle, and SpaceX — will exceed $1.3 trillion by 2027.
Why it matters
The report expects all six companies to generate negative free operating cash flow in 2026 and 2027, with recovery not projected until 2029. Debt, leases, guarantees, and other financing structures are playing an increasingly important role in funding this growth, which adds complexity to credit analysis.
What to watch
S&P Global Ratings' models generally assume a 2028 inflection point, with revenues accelerating and capital expenditure growth moderating as monetization improves. The report is not a rating action.
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S&P Global Ratings' new research shifts the focus from the scale of AI spending to how it is being financed. The projection that combined capital expenditure will exceed $1.3 trillion by 2027 comes with a warning: all six hyperscalers are expected to have negative free operating cash flow in 2026 and 2027, with recovery not seen until 2029.
The report highlights that debt, equity issuance, lease commitments, and other financing arrangements are increasingly used to support AI infrastructure. It also points to the growing use of joint ventures, special purpose vehicles (SPVs), and residual value guarantees (RVGs), which increase the complexity of credit analysis. Key areas being monitored include monetization of AI investments, demand durability, and overcapacity risk.
S&P Global Ratings assumes a 2028 inflection point where revenues accelerate and capital expenditure growth moderates. This suggests the current investment cycle is expected to peak before the end of the decade, though the report does not constitute a rating action.
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