AI spending by Big Tech to slow in 2028 as cash flow pressures mount

What happened

Analyst Jeff Pu of GF Securities expects the five largest U.S. cloud providers to spend about $1.2T on AI infrastructure in 2027 and $1.4T in 2028, with annual growth slowing to 43% and then 16% as cash flow pressures and credit rating concerns weigh on investment.

Confirmed

Global impact / market context

Slower spending growth means less money going to data centers and processors, which could soften revenue for suppliers, while Meta's negative credit outlook shows investors are watching whether heavy AI investment strains cash available and credit quality.

Analyst inference

Large cloud companies are still raising capital spending, with Microsoft expecting acceleration in its fiscal 2027 second half, while smaller AI cloud providers such as SpaceX, CoreWeave and Nebius are forecast to grow sharply before slowing to 6% in 2028.

Analyst inference

What to watch

1. S&P Global Ratings revised Meta's credit rating outlook to negative, citing concerns over spending by major U.S. cloud companies, which means rating agencies are questioning the financial strain of AI investment. Confirmed
2. Watch whether the five largest cloud providers confirm or adjust their capital spending plans, since the $1.2T and $1.4T figures are analyst forecasts, not company guidance. Proposed
3. Track cash flow and credit outlooks at Amazon, Alphabet, Meta and Microsoft, because pressure there could slow data center and processor orders and affect suppliers' revenue. Analyst inference

Evidence

• seekingalpha.com