24 SEPTEMBER 2026
Is the AI capex boom sustainable?
Sceptics increasingly point to financing risks as many tech firms now turn to debt markets, rather than cash reserves, to fund their spending plans. This leaves balance sheets more exposed to changes in borrowing costs, credit availability and future revenues.
The chart below paints a mixed picture.
On the one hand, AI-related investment is clearly substantial with companies such as Meta, Microsoft and Google now spending more than 20% of annual revenues on capital expenditure.
On the other, these figures remain broadly consistent with highly profitable businesses generating significant cash flows.
Capital spending is elevated, but it is being funded against a backdrop of robust revenues and earnings rather than speculative growth projections.
For now, this suggests the AI investment cycle has entered a more aggressive phase, but not necessarily an unsustainable one.
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