AI Capex Tops $1.3 Trillion by 2027, Surpassing US Defense Budget for First Time

Alphabet, Amazon, Microsoft, Meta, Oracle and SpaceX will generate negative free operating cash flow through 2027, S&P Global Ratings forecasts. AI infrastructure investment will top $1.3 trillion by 2027, forcing these firms to rely on debt, leases, equity, joint ventures, special purpose vehicles and guarantees for funding. S&P models 2028 as a potential inflection point, with a full cash flow recovery arriving in 2029.

High tech capital spending reached 55.2% of total nominal US capital spending in the second quarter of 2026, the highest proportion since 1960. Combined capex for Amazon, Google, Microsoft and Meta will surpass $1.1 trillion by 2027 and exceed the annual US defense budget of about $900 billion for the first time.