Are The AI Hyperscalers Technology Companies Getting Overextended? Amazon, Alphabet, Microsoft and Meta

 

Since the beginning of 2024 the technology so called hyperscalers companies, namely Alphabet, Amazon, Microsoft and Meta are spending hundreds of billions of USDs on artificial intelligence, AI infrastructure.

According to Wall Street research analysts and investors and Sylicon Valley investors and technologists there are doubts that the trillions of USDs in future AI spend will turn out to be profitable.

According to Wall Street research analysts predict the hyperscalers mentioned above plus SpaceX and Oracle will spend 4.1 trillion USDs on AI infrastructure from 2026 to 2028 compared to their 1.3 trillion USDs spent on AI infrastructure and AI data centers in the previous six years. 

What is more, there are reports that the AI hyperscalers Alphabet, Amazon, Microsoft and Meta have more than 3 trillion USDs in off balance sheet spending commitments that do not appear on their balance sheets and that Alphabet, Amazon and Meta will be net negative free cash flow until 2027. 

Furthermore research analysts estimate that Amazon, Alphabet and Meta will be negative free cash flow in until end 2027 if they make good on their AI spending plans. 

If the envisaged hundreds of billions of USDs demand of AI compute does not come to fruition, the AI Alphabet, Amazon, Microsoft and Meta hyperscalers' stocks could fall more than 80 % from current levels since trillions of USDs would have been spent with negative return on investment.