According to Goldman Sachs, the combined quarterly free cash flow of Meta, Microsoft, Alphabet, Amazon, and Oracle had fallen to near zero by the second quarter of 2026. The latest financial reports confirm this cash flow pressure: Alphabet's free cash flow turned negative for the first time in the second quarter at -$5.86 billion, while Meta's was only $784 million; Amazon's capital expenditures exceeded operating cash flow by approximately $8.8 billion in the quarter, while Microsoft still achieved $19.6 billion in free cash flow.
This does not mean that the five companies' core businesses have started to "burn cash," but rather that the growth rate of investment in AI servers, data centers, and power infrastructure has temporarily exceeded the growth rate of operating cash flow. The shrinking cash flow is driving tech giants to reduce share buybacks and rely more on debt, equity, and project financing, shifting the AI investment cycle from "self-financing" to "external financing."
Analysts predict that quarterly free cash flow will rise to approximately $120 billion in 2029, provided that the growth rate of capital expenditures slows significantly, while cloud computing and AI revenues are rapidly realized. If computing power demand continues to exceed supply, equipment prices rise, or AI monetization falls short of expectations, the rebound may be delayed.
