Moody’s Ratings

Massive AI infrastructure spending, nearing a trillion dollars annually, is financially straining tech giants. This shift from an asset-light to an asset-heavy model requires extensive debt and equity financing, impacting free cash flow and increasing balance-sheet risk for hyperscalers like Microsoft, Amazon, and Alphabet. While leading companies remain investment-grade, their profitability and borrowing capacities are tested by massive capital expenditures for physical infrastructure. Investors are increasingly scrutinizing the return on these unprecedented AI investments.