"Operating cash flow for the big five hyperscalers is expected to hit $577 billion this year from $378 billion in 2023, while debt should climb from $356 billion to $433 billion. That means their overall debt burden is actually getting lighter as the debt-to-cash ratio should dip from 0.94 to 0.75. "Given the hyperscalers' historically conservative capital allocation and balance sheet policies, elevated debt issuance is possible, as evident by the recent bond deals from Meta, Alphabet and Amazon," BofA said."
"And plenty of additional cash is on the way. By 2029, operating cash flow is seen jumping 95% to $1.1 trillion, while capex is forecast to grow at a much slower pace of 58% to $632 billion. But then there's Oracle. Unlike the other AI hyperscalers, it will have negative free cash flow until 2029, meaning its capex will exceed cash from operations, according to BofA."
"Indeed, fears about Oracle's debt binge have rattled the overall AI stock trade as the company isn't a cash machine like its AI peers. Recent earnings guidance was also weak, and the company raised its forecast for fiscal 2026 capex by another $15 billion. In addition, surging lease obligations have spooked Wall Street."
Meta, Alphabet, Microsoft, Amazon and Oracle are projected to see operating cash flow rise to $577 billion this year from $378 billion in 2023, while debt increases from $356 billion to $433 billion. The debt-to-cash ratio is expected to fall from 0.94 to 0.75, easing overall debt burden. The companies are tapping bond markets to gain balance-sheet flexibility and lower capital costs. Operating cash flow could reach $1.1 trillion by 2029 while capex grows more slowly to $632 billion. Oracle is likely to have negative free cash flow until 2029, limiting additional debt capacity.
Read at Fortune
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