Summary

• Big Tech—Amazon, Alphabet, Meta, Microsoft—faces unprecedented liquidity and leverage pressures as AI-driven capex now rivals or exceeds operating cash flows.
• Rapid debt accumulation and creative, opaque financing structures are reshaping risk profiles, raising concerns about sustainability and potential systemic impacts.
• Short-term free cash flow compression is expected through 2026, but projections anticipate robust FCF growth by 2028 as AI investments mature.
• While bubble risks exist, current AI capex is largely funded by historically profitable firms, suggesting any correction could leave valuable infrastructure in place.

An important change

Big Tech is undergoing a dramatic shift in its financial structure. Traditionally characterized by low capital requirements, high profit margins and significant ability to generate cash flow as well as high operating margins, many leading

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