TLDR: A recent report indicates that Amazon (AMZN), Meta Platforms (META), and Microsoft (MSFT) are expected to accumulate more than $1 trillion in new debt by 2028 to fund their escalating artificial intelligence (AI) capital expenditures. This marks a significant strategic shift from their historical self-funded growth models towards increased reliance on external financing.
Major technology companies Amazon (AMZN), Meta Platforms (META), and Microsoft (MSFT) are on track to incur over $1 trillion in new debt by 2028, primarily to finance their rapidly expanding artificial intelligence (AI) initiatives. This projection, highlighted in a report by 24/7 Wall St. and supported by analyses from firms like Morgan Stanley, signals a fundamental shift in how these tech giants fund their growth, moving away from reliance on robust free cash flows to external financing.
The AI revolution has driven these companies into an unprecedented spending spree, with capital expenditures soaring to build the necessary data centers and acquire the computing power for advanced AI innovation. Historically, Amazon, Meta, and Microsoft have leveraged their dominant positions in cloud computing and social media to self-finance these massive investments. However, the sheer scale of current and projected AI-related costs is pushing them towards new financial strategies.
According to estimates, AI-related capital expenditures (capex) for these companies are expected to reach $2 trillion between 2025 and 2028. Of this staggering amount, over $1 trillion is anticipated to be financed through new debt. The breakdown of this financing includes $1.4 trillion from cash flows, $200 billion from traditional debt, $500 billion from private credit, $800 billion from ‘opportunity credit,’ and $100 billion from sovereign funding. This indicates a growing strain on internal resources.
While these tech behemoths boast strong cash flows—for instance, AWS reported $30.9 billion in second-quarter revenue, and Meta had $18.9 billion in free cash flow through the first half of 2025—the shift to debt financing presents considerable risks. Interest payments on $1 trillion in debt, at rates ranging from 5% to 7%, could amount to an annual burden of $50 billion to $70 billion. This financial commitment demands a robust return on investment (ROI) to justify the gamble, especially given projections of exponentially greater capex over the decade to realize their AI visions.
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Analysts note that while the current shift is manageable due to the companies’ financial strength, it is not without peril. Concerns are being raised about the potential for strained finances and eroded investor confidence if AI adoption slows or if the expected returns do not materialize. Meta’s reported use of private credit, for example, suggests it may already be facing cash flow constraints. The situation draws parallels to the dot-com era, where rapid expansion fueled by debt led to financial instability for some firms. The sustainability and financial prudence of these decisions will be closely watched as the AI landscape continues to evolve.
