AI TRENDS | Moody's Says Large-Scale AI Spending Will Weaken U.S. Cloud Giants' Credit Metrics

According to Jin10, Moody's analysts said large-scale artificial intelligence investment may weaken the credit metrics of U.S. hyperscale cloud service providers, although strong capital buffers could ease the pressure. As capital expenditure growth outpaces operating cash flow, free cash flow at U.S. hyperscale cloud service providers is expected to decline from 2026 to 2027. Leverage pressure is expected to intensify further as companies such as Meta, Alphabet, and Oracle increase bond issuance. However, hyperscale cloud service providers all have large cash reserves, and revenue and EBITDA growth allow them to absorb high capital spending for 12 to 24 months without significantly damaging credit quality.