Big Tech’s artificial intelligence investment race is driving a cash flow squeeze at the heart of the US stock market. Microsoft, Amazon, Alphabet and Meta Platforms spent a combined $165 billion on capital expenditure in the second quarter, while generating just $7 billion in free cash flow, according to a report by Jefferies’ Global Head of Equity Strategy Christopher Wood.
Consensus forecasts cited by Wood show the four hyperscalers’ aggregate free cash flow falling to negative $12 billion in the third quarter. That would mark a dramatic reversal from the $60 billion generated in the final three months of 2025.
