Big Tech to Fund Over a Third of Its AI Investments with Debt in 2027, Goldman Sachs Predicts

Major tech companies including Meta, Microsoft, Alphabet, Amazon, and Oracle have announced they will undertake a combined $1.2 trillion in AI infrastructure investments by 2027. Goldman Sachs predicts that a significant portion of these investments will be financed through debt. By 2027, the hyperscalers are expected to finance 35% of their total investments with debt, up from 26% in 2025. The total capex is projected to rise from $405 billion in 2025 to $750 billion by year-end 2026 and $1.2 trillion in 2027. Companies have increasingly turned to debt markets to fill funding gaps, with Alphabet's recent negative free cash flow report signaling growing pressure on cash reserves. Meta's $12.5 billion debt-backed joint venture with BlackRock underscores this trend. This shift could both enhance competitive positioning in AI but also raise concerns about market sentiment toward these companies.

The debt financing strategy may give Big Tech a strategic edge in AI competition, but it also risks eroding investor confidence in these firms.