U.S. tech giants' AI infrastructure spending is expected to reach $740 billion this year, with high interest rates potentially becoming the main risk to AI stock gains

Odaily Planet Daily reported that Alphabet, Amazon, Meta, and Microsoft are expected to spend a combined $740 billion on AI computing infrastructure in 2026, with that figure potentially rising to $1 trillion by 2027. As capital expenditures grow rapidly, some tech giants are shifting from relying on their own cash flow to debt and equity financing, while persistently high U.S. long-term interest rates are becoming a significant risk to AI stock valuations.

Among them, Alphabet posted its first negative free cash flow since going public in the second quarter, while Amazon's free cash flow is projected at -$23.5 billion and -$36.2 billion for this year and next year, respectively. However, earnings at AI-related companies remain robust for now, 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, the pressure from high interest rates may still be absorbed, but if rates rise rapidly, highly valued AI and tech stocks will be more vulnerable to shocks. (Bloomberg)