Big Tech’s AI spending boom is carrying an ever-larger share of the US growth story. So far in 2026, investments tied to the AI build-out have been responsible for roughly one-fifth of US economic growth.
This year alone, the four leading “hyperscalers” — Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META), and Microsoft (MSFT) — are expected to spend roughly $800 billion in capital expenditures, or 10 times their spend in 2019, only seven years ago, per Goldman Sachs.
Sustaining that investment, however, will require an equally historic expansion in the cash generated by the companies footing the bill, says Apollo chief economist Torsten Sløk. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)
Over the past year, the financing for the AI spending race has come increasingly from the debt market, where the hyperscalers are expected to issue $250 billion in global investment-grade debt by the end of 2026.
Pushing the hyperscalers toward the debt market is a shortage of cash. While these companies have long been known as cash juggernauts, the intense spending requirements of AI infrastructure have pushed Big Tech toward increasingly tighter cash flow. In July, Alphabet reported its first quarter of negative free cash flow since going public as Google in 2004.
Allowing this to happen, argues Sløk, are expectations that the companies that have been deploying cash are set to begin making it back in spades. Consensus estimates on Wall Street now expect operating cash flow to grow from $600 billion in 2025 to roughly $2 trillion in 2030 — more than tripling within five years, per data compiled by Apollo Global.
If that cash flow doesn’t emerge, Sløk wrote to clients, the economics underpinning the dominant driver of the US stock market could quickly shift.
“If this doesn’t happen, then the risk is that the AI trade weakens, with credit spreads widening, capex plans getting cut and ultimately US GDP growth slowing,” Sløk wrote to clients.
The concentration risk of the US market’s reliance on the AI trade played out on Monday. Spurred by gains in hyperscaler Meta and semiconductor leaders Arm and Intel, the Nasdaq Composite index surged by 2.3% to close at an all-time high, while the S&P 500 gained 1.5%.
Yet under the hood, the breadth of that strength was highly concentrated. Thirty S&P 500 stocks touched 52-week lows on Monday, versus only seven that reached a 52-week high — a sharp divergence beneath the index rally.
Outlook for AI capex is strong, Morgan Stanley analysts led by chief equity strategist Michael Wilson wrote to clients on Monday. The analysts cite robust demand for compute, AI adopters seeing evidence of the benefits of their spending, rising computer lease rates, and the potential for “material benefits to human welfare.”
