The credit quality of the largest U.S. hyperscalers is gradually weakening as capital expenditures continue to outpace expectations, according to a new report from S&P Global Ratings.
The report, “Credit Outlook For Hyperscalers: A Temperature Check,” found that financings among the sector’s biggest players are becoming more complex and less transparent, while returns on investment are likely to remain inadequate.
S&P estimates the top six U.S. hyperscalers — Alphabet Inc., Amazon.com Inc., Microsoft Corp., Meta Platforms Inc., Oracle Corp. and Space Exploration Technologies Corp. (SpaceX) — will spend more than $7 trillion on data centers and AI-related capex from 2025 through 2030. Combined capex across the group is projected to reach $1.3 trillion in 2027, nearly triple its level two years ago, the agency said.
“The spending has been an increasingly important component of the U.S. economy and markets,” said David Tsui, S&P Global Ratings credit analyst. “Over the past year about half the growth in GDP from the U.S. private sector was for high-tech/AI-centric activity, by our estimate. The top six hyperscalers have raised more than $400 billion of debt and equity in the year to date, largely to fund AI.”
To fund that scale of investment, hyperscalers have turned to an increasingly diverse mix of financing sources, including internally generated funds; U.S. and foreign bond issuance by Alphabet and Amazon; equity issuance by Alphabet, Oracle, and SpaceX; and private credit and private equity arrangements, including joint ventures at Meta.
S&P warned that the resulting web of interconnected financings raises the risk that the failure of a single unrated entity in the AI ecosystem could damage the credit standing of a highly rated firm. The report also flagged circular funding among AI ecosystem participants — an arrangement S&P called constructive for now, but one that could reverse sharply if a key entity fails.
While the six hyperscalers retain strong credit ratings, backed by highly profitable core businesses and predictable cash flow, S&P noted that their balance sheet capacity to absorb emerging-technology bets is shrinking rapidly as capex continues to climb.
The full report is available to RatingsDirect subscribers at capitaliq.com. Non-subscribers can purchase a copy by emailing research_request@spglobal.com.
