After making a large-scale AI investment: Amazon, Google, and Meta will spend all their cash flow?

With the arms race in AI infrastructure construction entering the "deep water zone," a turning point that is unsettling for investors has emerged: in order to support the AI computing power demand, Amazon, Google, and Meta are facing the risk of depleting or even overdrawing their free cash flow. According to a research report released by JPMorgan on February 5, 2026, the total capital expenditure of the four major cloud giants in the United States - Amazon, Google, Meta, and Microsoft - is expected to reach $645 billion in 2026, a year-on-year surge of 56%, with additional spending reaching a staggering $230 billion. For investors, 2026 may be a year to closely monitor the balance sheets of tech giants. Google's 97% growth and Amazon's "cash deficit" In this infrastructure frenzy, Google's investment is very aggressive. In 2026, Google's capital expenditure guidance has been raised to $175-185 billion, a year-on-year growth rate of up to 97%, with its funds pouring into servers and technology infrastructure. While Google may only be "splurging money," Amazon could be described as "overdrafting the future." In 2026, Amazon's capital expenditure guidance is about $200 billion (a 52% increase year-on-year). However, the core problem is that the cash Amazon earns cannot cover its expenses - according to S&P Global Market Analysts, Amazon's operating cash flow in 2026 is expected to be around $178 billion. This means that Amazon's capital expenditure will exceed its operating cash flow, leading to substantial net cash outflows. In addition, according to "The Information," Amazon is also in talks to invest billions of dollars in OpenAI, further depleting its cash reserves. Meta's situation is similarly not optimistic. Its capital expenditure is expected to increase by 75% to $115-135 billion in 2026. Although not in the same situation as Amazon with direct overspending, this huge expenditure will almost "eliminate" Meta's free cash flow and make its once comfortable financial situation more strained. Shareholder returns under pressure, Microsoft may be the "exception" As the cash flow reservoir dries up, shareholder return plans are facing adjustment pressure. In recent years, tech giants have significantly supported their stock prices through large-scale stock buybacks. However, in 2026, this engine may be about to stall: Shrinking buybacks: Last year, Meta spent $26 billion on stock buybacks, but with this year's anticipated significant decline in free cash flow, its buyback efforts are likely to be forced to be cut. Dividend pressure: Google and Meta paid dividends of around $10 billion and $5 billion in the last fiscal year, respectively. They should be able to afford these dividends this year as well, but this will further squeeze their already tight cash flow. Amazon will not face the same problem, as it has not conducted stock buybacks since 2022 and has never paid dividends. Faced with a cash deficit in 2026, the possibility of restarting buybacks is slim. Faced with funding gaps, the giants are starting to leverage the flexibility of their balance sheets: Google: Despite the surge in spending, Google is currently in a "net debt zero" status (cash of $127 billion > debt of $47 billion). Standard & Poor's (S&P) points out that even if Google adds another $200 billion in net debt, it will not trigger a downgrade in its AA+ credit rating. Amazon: Despite facing a cash flow deficit, Amazon still had $123 billion in cash at the end of last year and issued $15 billion in bonds last November. Recently, it has submitted a registration statement to the SEC, preparing for further large-scale debt issuance. Amidst a chorus of "burning money," Microsoft has shown unique financial resilience. Although Microsoft's capital expenditures in the 2026 fiscal year (ending in June) are expected to exceed $103 billion (a growth of over 60%), analysts predict that it can still generate around $66 billion in free cash flow, enough to cover its massive spending. However, although Microsoft is likely to generate a large amount of free cash flow, it faces a restriction that other companies do not - higher commitments to dividend payouts. Microsoft paid out $24 billion in dividends last fiscal year and has already increased dividends by 10% this year. In conclusion: beware of the "Oracle trap" For investors, 2026 will be a year to closely monitor balance sheets. Oracle provides a dangerous warning - to fund data center construction, Oracle's net debt has soared to $88 billion, more than twice its EBITDA. This excessive overdraft on the balance sheet has resulted in market penalties, with its stock price falling 27% this year. Now, the $645 billion bill is on the table. As Silicon Valley giants try to buy a ticket to the AI era with today's cash flow or even future debt, if this gamble cannot be translated into real revenue growth in the future, the cash flow crisis of 2026 may just be the prologue to a valuation reconstruction. This article is reprinted from "Wall Street News"; GMTEight editor: Chen Siyu.