Big tech’s AI race is starting to look like a financing story, too. Megacap tech companies are leaning on debt for data center buildouts, which makes the cost of borrowing a bigger issue for Amazon, Alphabet, Microsoft, Meta, Nvidia and Oracle.
For years, the biggest tech names could mostly shrug off higher rates because they had large cash piles. Now they are spending more on AI infrastructure. CNBC says Amazon, Alphabet, Microsoft and Meta are projected to deploy a combined $750 billion this year, up more than 80% from 2025, and Goldman Sachs recently estimated that capital spending could reach about $920 billion. Amazon alone has forecast roughly $200 billion in spending this year and is widely expected to post negative free cash flow.
The shift is also showing up in debt markets. Nvidia, Oracle, Amazon, Alphabet and Meta are all turning to borrowing to help fund the buildout, and Reuters reported that bankers for SpaceX are preparing to meet investors about a bond offering of at least $20 billion. The article says investors are paying closer attention to the Fed, inflation data and Treasury yields, after the 10-year yield traded near 4.45%.
The main difference is each company’s balance sheet. Nvidia still stands out as a company with ample cash, with free cash flow jumping past $48.5 billion in its latest quarter, up from $26.1 billion a year earlier. For now, the test is how much AI spending these companies can keep funding if rates stay elevated.
