US tech giants' AI infrastructure spending is expected to reach $740 billion this year, with high interest rates posing a major risk to AI stock gains

Odaily News: Alphabet, Amazon, Meta and Microsoft's combined AI computing infrastructure spending in 2026 is expected to reach $740 billion, potentially rising to $1 trillion by 2027. As capital expenditure grows rapidly, some tech giants are shifting from relying on their own cash flow to debt and equity financing, while persistently high long-term U.S. interest rates are becoming a key risk to AI stock valuations.

Among them, Alphabet reported its first negative free cash flow since going public in the second quarter, while Amazon's free cash flow is expected to be -$23.5 billion and -$36.2 billion this year and next year, respectively. However, AI-related corporate earnings remain robust, with S&P 500 information technology sector profits expected to grow 71% year-over-year in the second quarter. The market believes that if corporate earnings and the economy continue to show resilience, high interest rate pressures may still be absorbed, but if rates rise rapidly, high-valuation AI and tech stocks will become more vulnerable to shocks. (Bloomberg)