AI investment boom puts Big Tech’s free cash flow under pressure

U.S. hyperscalers are starting to show returns on their artificial intelligence investments, but the rising cost of the buildout is taking a bite out of their free cash flow, and investors are noticing.

At their current trajectory, the so-called “hyperscalers” — Microsoft, Alphabet, Amazon, Meta Platforms and Oracle — are expected to spend more combined on capital expenditures than they generate in free cash flow by 2027, according to a Reuters analysis of LSEG consensus estimates.