{"id":1318,"date":"2026-07-24T17:41:54","date_gmt":"2026-07-24T17:41:54","guid":{"rendered":"https:\/\/interstatemovingexpertss.com\/?p=1318"},"modified":"2026-07-24T17:41:54","modified_gmt":"2026-07-24T17:41:54","slug":"moodys-says-unprecedented-ai-spending-threatens-credit-quality-of-amazon-meta-alphabet-and-others","status":"publish","type":"post","link":"https:\/\/interstatemovingexpertss.com\/?p=1318","title":{"rendered":"Moody&#8217;s says &#8216;unprecedented&#8217; AI spending threatens credit quality of Amazon, Meta, Alphabet and others"},"content":{"rendered":"<div>\n<div>\n<div>\n<div>\n<p>In this article<\/p>\n<\/div>\n<ul>\n<li><span>GOOGL<\/span><span><button><\/button><\/span><\/li>\n<li><span>MSFT<\/span><span><button><\/button><\/span><\/li>\n<li><span>ORCL<\/span><span><button><\/button><\/span><\/li>\n<li><span>CRWV<\/span><span><button><\/button><\/span><\/li>\n<li><span>META<\/span><span><button><\/button><\/span><\/li>\n<li><span>AMZN<\/span><span><button><\/button><\/span><\/li>\n<\/ul>\n<\/div>\n<div><button><span><span>Follow your favorite stocks<\/span><span>CREATE FREE ACCOUNT<\/span><\/span><\/button><\/div>\n<\/div>\n<div>\n<p>The race to build artificial intelligence infrastructure at a trillion-dollar annual clip is eroding the free cash flow and increasing balance-sheet risk at so-called hyperscalers, warned Moody&#8217;s Ratings.<\/p>\n<p>Read more <a href=\"https:\/\/interstatemovingexpertss.com\/?p=1316\">Trump threatens EU with \u2018substantial TARIFF\u2019 for \u2018ROBBING\u2019 U.S. tech giants<\/a><\/p>\n<p>In a research note released this week, Moody&#8217;s said that the spending surge is forcing even the world&#8217;s most cash-rich corporations like <span>Alphabet<span><span><button><\/button><\/span><\/span><\/span> and <span>Microsoft<span><span><button><\/button><\/span><\/span><\/span> to lean heavily on debt, stock sales and off-balance-sheet moves to fund their AI ambitions.<\/p>\n<p>&#8220;Previously, these companies relied on asset-light structures centered on software, intellectual property, and scalable cloud services that required modest capital investment,&#8221; Moody&#8217;s said in the Wednesday note. &#8220;The transition from asset-light to asset-heavy models requires unprecedented levels of investment and capital raising.&#8221;<\/p>\n<p>The moves &#8220;threaten credit quality&#8221; for the six companies tracked by Moody&#8217;s, which include Microsoft, <span>Amazon<span><span><button><\/button><\/span><\/span><\/span>, Alphabet, <span>Meta,<span><span><button><\/button><\/span><\/span><\/span> <span>Oracle<span><span><button><\/button><\/span><\/span><\/span> and <span>CoreWeave,<span><span><button><\/button><\/span><\/span><\/span> according to the report.<\/p>\n<p>The ratings firm projects that capital expenditures \u2014 or capex, which are investment for physical assets like data centers \u2014 will hit $785 billion in 2026 before reaching about $1 trillion next year.<\/p>\n<p>The shift breaks a decades-long Silicon Valley formula that created the world&#8217;s most valuable companies. Software costs little to replicate, yielding fat profit margins and fortress balance sheets. Generative AI, by contrast, demands a vast physical footprint: warehouses crammed with expensive and energy-hungry servers and chips.<\/p>\n<p>To finance the expansion, tech giants are increasingly turning to Wall Street, resulting in booming profits for the financial industry. <\/p>\n<p>Direct debt across the six hyperscalers has reached approximately $460 billion, according to Moody&#8217;s. Tech companies are also tapping public markets for cash, including Google-parent Alphabet, which last month announced an $85 billion equity sale.<\/p>\n<\/div>\n<h2>Leasing data centers<\/h2>\n<div>\n<p>The ratings firm noted that because AI hardware and infrastructure require massive upfront investment while revenue materializes over a longer time horizon, free cash flow across the sector is coming under pressure.<\/p>\n<p>To keep direct debt off their balance sheets, hyperscalers are leaning on off-balance-sheet financing, mostly through long-term data center leases, the report explained. <\/p>\n<p>Moody&#8217;s said that lease commitments across the group have ballooned to $1.2 trillion. More than $820 billion of that total is from leases that haven&#8217;t started yet, meaning the data centers are still being built.<\/p>\n<p>While these obligations don&#8217;t show up as traditional debt, Moody&#8217;s says it considers them as debt-equivalent liabilities that will bind companies to significant rent payments down the line.<\/p>\n<p>Read more <a href=\"https:\/\/interstatemovingexpertss.com\/?p=1314\">Russian attack cuts power to around 150,000 in Ukraine\u2019s north as Kyiv hits missile, oil facilities<\/a><\/p>\n<p>Despite the warning, Moody&#8217;s noted that Microsoft, Alphabet, Amazon and Meta retain among the strongest corporate balance sheets in the world, making it unlikely that their investment grade ratings are under imminent threat.<\/p>\n<p>While their free cash flows are tightening and their borrowing buffers are shrinking, Moody&#8217;s does not view their investment-grade ratings as under imminent downgrade threat.<\/p>\n<p>The immediate pressure is concentrated on lower-rated entities like Oracle and specialized AI cloud provider CoreWeave. Oracle carries a rating of Baa2 with a negative outlook, placing it just two notches above junk status.<\/p>\n<p>Meanwhile, CoreWeave operates within the high-yield market with a Ba3 rating, relying on complex private debt structures to finance its GPU hardware fleets.<\/p>\n<\/div>\n<h2>Circular ecosystem <\/h2>\n<div>\n<p>Moody&#8217;s also pointed to structural circularity within the AI boom. Some of the multibillion-dollar backlogs reported by hyperscalers stem from strategic deals with pre-IPO artificial intelligence labs including OpenAI and Anthropic, Moody&#8217;s noted.<\/p>\n<p>The firms have invested billions into AI labs that, in turn, spend heavily on cloud computing from those same companies, creating what Moody&#8217;s described as a circular AI ecosystem.<\/p>\n<p>The overlapping relationships heighten risks because many of the industry&#8217;s biggest companies are increasingly dependent on the same AI customers and the same assumptions about future demand, Moody&#8217;s said. <\/p>\n<p>Even so, the tech giants have significant strengths that help offset those risks.<\/p>\n<p>Demand for AI computing remains robust, cloud businesses continue to grow and hyperscalers have signed hundreds of billions of dollars in long-term customer contracts that should provide predictable revenue. Those deals support the industry&#8217;s largely-strong credit profiles, even amid the spending boom. <\/p>\n<p>Still, investors should recognize that the tech industry&#8217;s financial profile is undergoing a structural change unlike anything seen in the cloud era, according to Moody&#8217;s.<\/p>\n<p>&#8220;Investors will increasingly focus on these companies&#8217; ability to realize an adequate return on investment,&#8221; the ratings firm said. <\/p>\n<p>Read more <a href=\"https:\/\/interstatemovingexpertss.com\/?p=1312\">Trump considering a \u2018massive attack\u2019 on Iran as Tehran labels UK \u2018accomplice\u2019 to America<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Moody&#8217;s said AI spending is forcing even the world&#8217;s most cash-rich corporations to lean heavily on debt, stock sales and off-balance-sheet moves.<\/p>\n","protected":false},"author":1,"featured_media":1317,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1318","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Moody&#039;s says &#039;unprecedented&#039; 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