Moody’s warns AI infrastructure spending threatens Big Tech credit

The shift marks a departure from the traditional software-first strategy where minimal capital expenditure yielded high profit margins. Generative AI requires a massive physical footprint, turning warehouses into energy-hungry data centers stocked with expensive chips. This transition has forced companies like Alphabet, Microsoft, Amazon, Meta, Oracle, and CoreWeave to finance growth through aggressive capital raising.

Capital expenditures for these firms are projected to hit $785 billion in 2026, climbing toward $1 trillion the following year. To sustain this momentum, the six tracked hyperscalers have accumulated approximately $460 billion in direct debt. Alphabet’s recent $85 billion equity sale serves as a stark example of the current scramble for liquidity. By moving away from scalable intellectual property toward infrastructure-heavy operations, these corporations are trading their once-fortress balance sheets for unprecedented financial exposure.