AI Investment Surge Drives Up Capex and Pressures Tech Giants’ Cash Flow

Major technology companies are increasing capital spending on artificial intelligence infrastructure, with projected investments in 2026 set to surpass their ability to generate cash from operations.

Alphabet, Amazon, Meta, and Oracle have outlined plans to allocate a combined total of about $660 billion to AI-related capital expenditures in 2026. These spending levels are expected to outpace the cash these companies generate through their core business activities during the same period.

Amazon has projected capital expenditures of approximately $200 billion for 2026, which is higher than its anticipated $180 billion in operational cash flow. Meta forecasts an increase in capital spending to a range between $115 billion and $135 billion in 2026, nearly double its 2025 capex of $72 billion.

Alphabet expects its capital expenditures to reach between $175 billion and $185 billion in 2026, which would be nearly twice the amount spent the previous year. Despite this high level of investment, Alphabet continues to hold a strong cash position, with $127 billion in cash and no net debt.

What the numbers show

• Amazon’s trailing twelve-month free cash flow fell to $11.2 billion in 2025, a 71% decrease from the prior year
• Meta’s Q3 2025 capex was about 64.6% of its operating cash flow, Alphabet’s was 51.4%, and Amazon’s was 88.7%
• Microsoft’s projected 2026 capex is $103 billion, with free cash flow around $66 billion

Amazon’s recent financial data shows that its trailing twelve-month free cash flow dropped to roughly $11.2 billion in 2025, down from about $38.2 billion the year before. This decline occurred as Amazon’s operating cash flow increased to $139.5 billion and capital expenditures rose to $128.3 billion.

In 2025, Amazon’s capital expenditures accounted for nearly 90% of its operating cash flow, resulting in only about $14.8 billion in trailing free cash flow. Meta’s capital spending in the third quarter of 2025 represented about 64.6% of its operating cash flow, while Alphabet’s was approximately 51.4%.

Microsoft’s approach to capital spending is more moderate compared to its peers. For its fiscal year ending June 2026, analysts estimate Microsoft will spend about $103 billion on capital expenditures, while maintaining robust free cash flow of around $66 billion.

Industry reaction

Amazon management has confirmed that the reduction in free cash flow is directly linked to increased capital expenditures for AI infrastructure. This connection has been stated in company commentary.

Despite the elevated capital spending, Alphabet’s financial position remains strong, as the company continues to report substantial cash reserves and no net debt.

* This article is based on publicly available information at the time of writing.