Big Tech Boosts AI Spending as Free Cash Flow Comes Under Pressure

Free cash flow is the money left after capital expenditure that companies can use to repay debt, buy back shares and reinvest. It is also a key measure of whether AI investment can translate into shareholder returns. Evercore ISI estimates that capital spending by the Magnificent Seven and Oracle, as a share of operating cash flow, rose from no more than 40% over the previous three years to nearly 50% in 2025 and will exceed 60% in 2026–2027.

Evercore ISI estimated on February 17, 2026, that AI capital expenditure would total about $650 billion over the next 12 months, with Amazon’s full-year capital spending reaching $200 billion. Its latest report on February 23 further forecast that free cash flow at Amazon, Alphabet and Meta would decline year on year in 2026. Only Microsoft is expected to post growth of 5%, while Nvidia and Apple could deliver double-digit increases.

Amazon, Google, Meta and Microsoft are racing to expand their “AI factories,” pouring money into data centers, servers, computing chips and power infrastructure. The four major U.S. cloud service providers are seeking to secure computing capacity for generative AI, reshaping competition across the global semiconductor, energy and cloud markets.

Amazon expects capital spending to rise to $200 billion in 2026, with the funds focused on AI data centers and infrastructure. Its AI business already generates more than $15 billion in annualized revenue, and the company is considering selling its in-house chips to outside customers. Amazon also expects AI to boost AWS sales, which it forecasts will double to $600 billion by 2036.