AI spending by Big Tech to slow in 2028 as cash flow pressures mount

Spending by major U.S. cloud computing companies on AI infrastructure is expected to keep rising through 2027 before slowing in 2028 as mounting cash flow pressures and concerns over credit ratings weigh on investment.

The five largest U.S. cloud service providers are expected to spend about $1.2T in 2027 and $1.4T in 2028, representing annual increases of 43% and 16%, respectively, according to Jeff Pu of GF Securities. The estimates are lower than his previous forecasts of 53% and 20% growth.

The revised outlook comes as companies including Amazon AMZN, Alphabet GOOGL, and Meta META signal further increases in capital spending to expand computing capacity, build data centers, and support AI initiatives.

Microsoft MSFT also expects spending to accelerate in the second half of its fiscal 2027 as demand for processors and delays in third-party deliveries keep capacity tight.

But the scale of investment is putting pressure on cash flow.

S&P Global Ratings recently revised Meta's credit rating outlook to negative, citing concerns over spending by major U.S. cloud companies.

Meanwhile, spending by smaller AI-focused cloud providers, including SpaceX SPCX, CoreWeave CRWV, and Nebius NBIS, is expected to rise sharply in 2026 and 2027 before growth slows to 6% in 2028, based on Bloomberg consensus estimates.

"We view SpaceX as best-positioned," Pu said, naming Elon Musk company among small providers given its Starlink business and access to financing.

He said funding could become more selective for other operators, favoring larger companies with stronger balance sheets and more diversified revenue sources.

GF Securities also trimmed its forecast for global AI accelerator spending in 2028 to $1.01T from $1.03T.

The brokerage said the widening gap in financial strength among AI infrastructure providers could lead to slower industry-wide spending growth from 2028, even as demand for computing capacity remains strong.