The AI Race: Tech Giants' Debt Reaches $350 Billion

The development and implementation of AI technologies are becoming an unprecedented financial burden for global tech giants. According to Bloomberg analysis, the combined debt of the industry's biggest players—Alphabet, Amazon, Meta, Microsoft, and Oracle—has increased by $350 billion over the last five years. Most of these funds are directed toward training AI models and building modern data-centers to support their operations. This is reported by Ixbt.com reports .

Today, AI infrastructure is significantly more expensive than traditional server systems. New-generation data-centers require thousands of specialized NVIDIA accelerators, as well as extremely powerful power supply and cooling systems. Consequently, the capital expenditures of large corporations have skyrocketed. For instance, last year these five companies spent over $10 billion on interest payments, double the figure from 2019.

Financial Stability and Rating Downgrades

The financial situation varies among companies. While Alphabet (Google) still maintains high free cash flow, Amazon's cash flow turned negative in the first quarter of this year. Oracle's situation is more concerning: the international rating agency S&P Global Ratings downgraded the company's credit rating to the lowest investment grade due to massive spending on AI infrastructure.

DA Davidson & Co. analyst Gil Luria notes that the business model for software developers is fundamentally changing. Previously, such companies operated without heavy capital expenditures, but now cloud computing and AI technologies are forcing them to invest billions in server infrastructure. This is negatively impacting the net profit and cash reserves of most corporations.

Future Risks and Investor Skepticism

Company executives, including Amazon CEO Andy Jassy and Meta founder Mark Zuckerberg, express confidence that these costs will pay off. They believe that demand for AI computing power currently far exceeds supply and that these investments will yield significant returns in the future. However, the bond market and major investors are acting cautiously. Notably, demand for Amazon's recent $25 billion bond issuance was lower than expected.

Fitch Ratings analyst Jason Pompei states that it is difficult to draw definitive conclusions about the return on these investments for now. He believes the current hype surrounding AI is largely based on expectations of future growth. By 2026, the largest tech companies plan to spend up to $725 billion on data-centers and NVIDIA chips.

Experts warn that, as seen in the case of Intel, even market leaders can face crises due to poor strategic decisions and massive debt. As the use of global AI services grows in the Uzbekistan market, the financial stability of these tech giants remains crucial for the global digital economy.