Five major tech companies, including Amazon, Alphabet, Microsoft, Meta, and Oracle, are projected to spend nearly $1.1 trillion on AI data centers by 2027. Their combined capital expenditures grew from $155 billion in 2022 to $226 billion in 2024, with expectations reaching $381 billion in 2025.
Research from Wharton finance professor Jessica Wachter and Jonathan Wachter indicates that this scale of investment requires a 2.7-fold increase in AI-sector productivity to be financially viable. The study suggests that without a significant productivity boom, these expenditures risk becoming a major capital misallocation.
S&P Global Ratings estimates that total capital expenditure for six firms, including SpaceX, could hit $1.3 trillion by 2027. Among this group, only Microsoft is projected to maintain a positive free cash flow of $33.6 billion in 2027, while others face negative scenarios.
Debt financing is playing a critical role, with hyperscaler debt issuance rising from $17 billion in 2024 to nearly $194 billion in the first half of 2026. Goldman Sachs predicts that debt will cover approximately one-third of the total $1.14 trillion in capital expenditure projected for 2027.
Moody’s and Goldman Sachs anticipate that capital spending will exceed $1 trillion by 2027, noting that financial pressure is already impacting credit metrics. Analysts suggest that if growth in capital expenditure slows after 2027, the industry might pivot toward software monetization.
