Oracle and Amazon both spent more than they generated, posting free cash flow deficits of $24B and $27B as AI CapEx accelerates past sustainable levels. Microsoft generated $68B in free cash flow despite $116B in CapEx, while Alphabet stayed cushioned by Search even as FCF dipped negative. Oracle carries the thinnest margin for error among hyperscalers, with $125B in debt, a BBB credit rating, and a 40% one-year stock drawdown.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Amazon didn't make the cut. Grab the names FREE today. Oracle (NYSE:ORCL) and Amazon (NASDAQ:AMZN) both closed their latest quarters with the same uncomfortable admission: AI infrastructure is now devouring cash faster than either business can generate it.
Oracle reported Q4 FY2026 on June 10, 2026, and Amazon followed with Q2 FY2026 on July 30, 2026. Set next to Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), they look the most exposed. Oracle's cloud infrastructure segment grew 93% year over year, and RPO ballooned to $638 billion, up 363%.
The catch: FY2026 CapEx hit $55.66 billion against operating cash flow of just $31.98 billion, producing free cash flow of -$23.69 billion. CFO Hilary Maxson told analysts to expect a "net cash outlay for capital expenditures of around $70 billion" in FY2027, financed by roughly $40 billion in debt and equity. Non-current debt already climbed to $124.7 billion.
Investors have noticed: ORCL is down 26.88% since the earnings report. AWS grew 36.7% year over year to $42.2 billion, the fastest in 18 quarters, with a $496 billion backlog. But Q2 CapEx alone reached $54.21 billion, pushing H1 2026 free cash flow to negative $27 billion.
Andy Jassy framed it plainly: "we'll spend a lot of capex and encounter free cash flow headwinds until these data centers come online." Trainium commitments from OpenAI (~2 GW starting 2027) and Anthropic (up to 5 GW) make the buildout necessary, but concentrate the payback in two counterparties. Microsoft still generated $67.99 billion of FY2026 free cash flow despite $115.95 billion in CapEx. Alphabet's Q2 slipped to -$5.86 billion FCF, uncomfortable but cushioned by Search advertising.
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