Six hyperscalers are projected to spend $1.3 trillion combined on AI capex in 2027, up from an estimated $870 billion this year, according to S&P Global. Of the six, only Microsoft is forecast to keep positive free cash flow next year.
S&P Global now models $1.3 trillion in combined 2027 capital expenditures across Alphabet, Amazon, Meta Platforms, Microsoft, Oracle and SpaceX. Only Microsoft is projected to post positive free cash flow that year. The other five are expected to burn cash even as their AI spending climbs.
Capex keeps climbing across the group
The six companies had $470 billion in combined capex in 2025, a figure S&P expects to rise to $870 billion this year. That would reach $1.3 trillion in 2027, roughly a 50% increase year over year. That pace trails this year's jump, but the dollar amounts involved are far larger. On recent earnings calls, most of the companies' CEOs said they expect strong capex growth to continue in 2027. All the CEOs have defended the spending, arguing it will generate compelling returns and that not committing the capital would be an even greater risk given AI's potential to change society.
Even so, the buildout has begun to strain balance sheets that have historically thrown off strong free cash flow. In the second quarter of this year, three of the six companies still generated free operating cash flow. Next year, if S&P Global's projections hold, only one will.
Projected 2027 capex and free cash flow, by company
S&P Global's per-company estimates show a wide gap between spending and cash generation:
- Alphabet: $357 billion capex, ($82.7 billion) free cash flow
- Amazon: $319.1 billion capex, ($60.1 billion) free cash flow
- Meta Platforms: $164 billion capex, ($3.5 billion) free cash flow
- Microsoft: $189 billion capex, $33.6 billion free cash flow
- Oracle: $95 billion capex, ($41.6 billion) free cash flow
- SpaceX: $197.2 billion capex, ($114.4 billion) free cash flow
Alphabet and Amazon are projected to outspend Microsoft by a wide margin in 2027, notable because the three companies control the largest cloud businesses in the world. S&P Global attributes part of Microsoft's edge to its heavier reliance on leases, which could let the company reclassify some finance leases in capex as operating leases that instead flow through the income statement — improving reported free cash flow.
Microsoft's lease exposure and credit standing
S&P Global says Microsoft carries more than $329 billion in future lease obligations, ahead of Meta's $279 billion, the next largest. That could also explain why S&P projects Meta's 2027 capex well below Alphabet's and Amazon's despite Meta's own large computing buildout.
The accounting choices have made hyperscaler balance sheets a point of contention as data-center construction continues, and it isn't clear how the market will treat these moves or whether rivals will follow Microsoft's approach. Still, S&P Global maintains Microsoft's debt at its highest possible credit rating, AAA, a grade held by only one other publicly traded company, Johnson & Johnson.
S&P Global's models generally assume an inflection in 2028, with capex flattening and revenue accelerating — a shift that could return more hyperscalers to positive free cash flow.
Source: The Motley Fool
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