Moody's warns that AI investment spree will impact technology giants 'financial soundness, Microsoft, Oracle and other companies are under pressure on free cash flow

On July 25, as global technology giants competed to increase the construction of artificial intelligence infrastructure, Moody's rating warned that the AI investment boom is eroding the free cash flow of large cloud computing service providers and pushing up balance sheet risks. Future investors will pay more attention to whether these companies can get enough returns from their huge AI investment. Moody's said in a research report released this week that six technology companies, including Microsoft (MSFT.US), Amazon (AMZN.US), Google parent company Alphabet(GOOGL.US), Meta(META.US), Oracle (ORCL.US) and CoreWeave(CRWV.US), are moving from an "asset-light" business model that relied on software, intellectual property and cloud services in the past to an "asset-heavy" model that required large-scale construction of infrastructure such as data centers. Moody's pointed out that the shift requires unprecedented capital investment and financing scale and could weaken the credit quality of these companies. The agency predicts that AI infrastructure investment will continue to rise, with capital expenditures of six companies reaching approximately US$785 billion in 2026 and further approaching US$1 trillion in 2027. The report pointed out that compared with traditional software businesses, generative AI requires a large amount of hardware investment such as data centers, GPU servers, and high-performance chips, resulting in the technology industry's long-term development path of relying on an asset-light model to maintain high profit margins and a solid balance sheet. Fundamental changes.