Evercore ISI: Cash Flow of Super Large Scale Cloud Service Providers Expected to "Bleed" in the AI Spending Boom, Only Microsoft Corporation (MSFT.US) May Escape Unharmed

According to Evercore ISI data, as spending on artificial intelligence (AI) infrastructure expands significantly, Microsoft Corporation (MSFT.US) is expected to be the only mega-scale cloud service provider among the "Big Seven" in the US stock market to achieve free cash flow growth in 2026. Evercore pointed out that Amazon.com, Inc. (AMZN.US), Alphabet Inc. Class C (GOOGL.US), and Meta Platforms (META.US) are expected to see a decline in free cash flow in 2026, while another large cloud service provider not belonging to the "Big Seven," Oracle Corporation (ORCL.US), is also expected to see a decrease in free cash flow. In contrast, Microsoft Corporation is expected to achieve a 5% growth in free cash flow in 2026, while the other two tech giants in the "Big Seven," NVIDIA Corporation (NVDA.US) and Apple Inc. (AAPL.US), are expected to achieve double-digit growth in free cash flow. Capital expenditures from these tech giants in the industry are expected to grow by 58% in 2026, reaching over $700 billion. Evercore analysts led by Amit Daryanani stated in an investor report, "The question remains, how long can mega-scale enterprises sustain this level of investment, especially when free cash flow in certain cases drops below zero. Looking at the long-term free cash flow multiples, Apple Inc. remains attractive in the group, trading at a multiple of less than 30 times the 26th and 27th fiscal year free cash flows, while the current average trading price of the 'Big Seven' is over 95 times the free cash flow multiples." The analysts also pointed out, "In the past three years, the total capital expenditures of the 'Big Seven' plus Oracle Corporation have accounted for around 40% or lower of total operating cash flow, but in the 2025 calendar year, this proportion has risen to around 50%, and is expected to reach over 60% in the 2026 and 2027 calendar years. Although the demand driven by artificial intelligence provides compelling logic for long-term investment, the short-term consequences are weak free cash flow, limited capital returns, and increased sensitivity to the financing environment. If debt becomes a more important source of funding for infrastructure expansion, we expect investor focus to shift towards assets with lower capital intensity, more focus on investment return and capital efficiency."