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AI spending could outpace free cash flow for major tech firms by 2027
Reuters data cited by Yahoo Finance projects $534 billion in capex versus a $340 billion rise in combined operating cash flow through 2027, with Microsoft’s cash flow holding up better than Oracle’s.
The AI buildout is forcing some of tech’s biggest cloud and software players to spend more on infrastructure than the free cash flow they generate, raising pressure on how quickly those investments translate into returns, according to Yahoo Finance citing Reuters.
For Microsoft, the article points to fiscal Q2 results showing operating cash flow of $35.8 billion versus capex, including finance leases, of $37.5 billion, alongside $5.9 billion of conventional free cash flow and stronger cash generation in fiscal Q3 when operating cash flow rose to $46.7 billion and free cash flow reached $15.8 billion after $30.9 billion of cash property and equipment spending.
Microsoft is also described as having an AI business running at a more than $37 billion annual revenue run rate, while the central question is whether Azure and Copilot can deliver attractive returns before GPUs depreciate or become obsolete.
Oracle is portrayed as facing a more immediate cash squeeze, with fiscal 2026 capex of $55.7 billion against operating cash flow of $32 billion, leaving free cash flow at negative $23.7 billion, even as cloud revenue grew 39% to $34 billion and remaining performance obligations reached $638 billion.
The piece adds that Oracle plans to raise between $45 billion and $50 billion through debt and equity to fund capacity, and notes different market positioning as Microsoft short interest fell 6.4% to 1.20% of float by June 30, while Oracle’s rose 11.4% to 2.47%.