The $171 Billion Quarter

NEW YORK, Oct. 17 — InIn the three months to June, Microsoft, Alphabet, Amazon and Meta reported a combined $171.2 billion of capital spending on the measures used here, including data centers, servers and network gear. These are company-wide figures; Amazon’s also includes its fulfillment network. In the first quarter of 2024 the same four reported $47.7 billion.

Their businesses still pay for most of it, with little to spare: in the second quarter the four paid $165.1 billion in cash for property and equipment, against $171.8 billion of cash from operations. Around that, they have added debt, signed leases not yet recorded as liabilities and brought in partners whose borrowing they do not carry.

The $171.2 billion combines Microsoft’s reported capital expenditures, including finance leases; Alphabet’s and Amazon’s cash-flow-statement purchases of property and equipment; and Meta’s reported capital expenditures, including principal payments on finance leases.The DefinitionMicrosoft counts a finance lease at its full value when the lease begins, before the cash is paid; its measure also reflects the timing of goods received and paid for. Meta’s adds cash principal payments on finance leases. Amazon’s figure is gross, before $1.1 billion of proceeds and incentives in the quarter. On that basis the four reported $250.4 billion in 2024, $413.5 billion in 2025 and $302.8 billion in the first half of 2026. The second quarter was up 79 percent from a year earlier.

Microsoft said in July that customer demand “continues to exceed available capacity.” What has changed, for shareholders and lenders, is the price of money. This week, in the selling of CoreWeave’s and Oracle’s debt, the credit market showed what it now charges for AI borrowing that operating cash does not cover.

The Cash

In the second quarter of 2024 the four paid $52.9 billion in cash for property and equipment, less than half the $108.5 billion their operations produced. The share was 65 percent across 2025 and 96 percent in the latest quarter. The $6.7 billion left over would not have covered Microsoft’s quarterly dividend of $6.8 billion.

The total hides a split. Microsoft had $19.6 billion of free cash flow in its quarter to June, and Amy Hood, its chief financial officer, said on July 29 that it expects “to remain free cash flow positive in FY27.” Alphabet’s free cash flow for the quarter was negative $5.9 billion; Amazon’s, over 12 months, an outflow of $7.6 billion. Meta’s was $784 million.

The Borrowing

Debt has grown alongside the spending. Long-term debt at Alphabet, Amazon and Meta rose to $310.7 billion at the end of June from $92.3 billion at the end of 2024. Alphabet’s went from $10.9 billion to $98.2 billion, with $51.8 billion of bonds sold in six currencies in the first half of 2026. Amazon raised $67.0 billion of long-term debt in six months. Meta borrowed $24.9 billion in the second quarter and bought back no stock, against $10.2 billion a year earlier.The CushionMeta ended June with $90.3 billion in cash and marketable securities and $83.7 billion of debt, Susan Li, its finance chief, told analysts on July 29.

Alphabet also sold $49.6 billion of stock in June, net, including a $10.0 billion private placement with an affiliate of Berkshire Hathaway and mandatory convertible preferred shares, for purposes including “capital expenditures to scale AI infrastructure and global compute.”GOOGLNasdaq279.84▼3.98−1.4%Alphabet · Friday’s session It ended June with $242.5 billion in cash and marketable securities, including the financing proceeds. Meta’s finance chief, Susan Li, gave Meta’s reason on July 29: it had been evolving its capital structure “to include a greater mix of debt as we work to bring down our cost of capital.”

Microsoft is the exception: its long-term debt fell to $31.1 billion from $40.2 billion over its fiscal year. Yet the group borrows enough that the Fed chairman has cited it: on Sept. 16, the day the Federal Reserve raised rates for the first time since 2023, Kevin Warsh said the hyperscalers’ fund-raising, and the competition for capital it brings, partly explained the rise in yields.The Price of MoneyThe 10-year Treasury yield closed above 5 percent on Sept. 16, its highest close since 2007, CNN reported.

Off the Books

At June 30, four principal disclosures of leases not yet commenced totaled about $830.5 billion. Microsoft reported $329.1 billion, Meta about $279 billion (and some $68 billion more signed in July), Amazon $137.2 billion and Alphabet $85.2 billion. Their scopes differ: Microsoft and Alphabet say primarily data centers, Meta includes colocations and network infrastructure, and Amazon’s line is broader. Alphabet separately disclosed a $5.8 billion short-term lease. The subtotal is about 4.9 times one quarter’s reported capital spending, but represents nominal payments over many years, not an equivalent construction bill or a recognized debt balance.Not Yet BegunAlphabet’s filing calls its $85.2 billion of future lease payments “not yet recorded.” Microsoft says some of its arrangements depend on contractual conditions being met.

How much reaches the capital-spending line is partly accounting. On July 29 Microsoft said it would treat its data centers and office buildings as lasting 25 years rather than 15, shifting more future data-center leases from finance to operating treatment. “Finance leases are included in capital expenditures while operating leases are not,” Ms. Hood said. That alone cut its calendar-2026 forecast to about $175 billion, from roughly $190 billion in April; otherwise, she said, its investment expectations “remain unchanged.”

Meta has gone further, into ventures it does not consolidate. It owns 20 percent of the venture building its Hyperion campus in Louisiana, about $27 billion of development by its filing’s count; funds managed by Blue Owl Capital own the rest, financed partly with debt sold privately to PIMCO and other investors. Meta will lease the campus from 2029, has given residual-value guarantees with a threshold of about $28 billion and puts its maximum exposure to loss at $46.03 billion. On July 28 it announced a second, with funds managed by BlackRock, for a 1-gigawatt campus in El Paso: Meta will hold 20 percent and provide residual-value guarantees with a threshold of about $13 billion, and a $12.5 billion debt financing is to fund part of BlackRock’s stake.

Alphabet stands behind other companies’ data centers. At June 30 it had backstopped up to $43.8 billion of payment obligations relating to data centers, and had agreed, subject to final terms, to provide an estimated $24.1 billion of future backstops for data-center and energy-supply infrastructure. In July it said it would “expand the use of third-party capacity in Q3 as a bridging strategy.”

The Test

None of this puts the four in CoreWeave’s position; its bonds traded this week at yields near 15 percent. They are paying most of the bill from operating cash. But in the paper’s reading, part of the build-out’s outer ring, the rented capacity, the joint ventures and the data centers Alphabet backstops, is financed by borrowing, and so is exposed to the kind of repricing CoreWeave and Oracle met this week. Microsoft and Meta are among the customers behind CoreWeave’s backlog, Deutsche Bank said on Oct. 15. Both of Meta’s ventures rely partly on debt. Alphabet’s credit backstops expose it to payments in specified default scenarios; its filing also permits termination payments under certain conditions.

Lip-Bu Tan, Intel’s chief executive, named the constraint in Singapore on Oct. 12: “capital and the cost of capital,” he said, and “in the long run, people want to see the ROI,” CTech reported.

Finance leases are included in capital expenditures while operating leases are not.

Nothing in the filings suggests the four cannot pay. The filings show that capital spending has absorbed a growing share of operating cash. In the paper’s reading, further increases could deepen reliance on bonds, landlords and partners, exposing the build-out to a credit market that repriced some AI borrowers this week. The guidance already given implies more. Alphabet’s 2026 range of $195 billion to $205 billion leaves at least $114.4 billion for the second half, against $80.6 billion in the first; Meta’s range of $130 billion to $145 billion leaves at least $79.1 billion, against $50.9 billion. Microsoft expects more than $50 billion in its quarter to September. Amazon raised its 2026 cash-capital-spending forecast to about $220 billion on July 30; its first-half gross purchases of property and equipment were $98.4 billion.

Meta reports on Oct. 21, Microsoft and Alphabet on Oct. 28, and Amazon on Oct. 29. The figures to read sit below the spending line: free cash flow, new debt, leases signed but not begun, and the first word on 2027, when Alphabet expects its spending to “increase significantly.” Microsoft has said spending in its fiscal year to June 2027 will grow; Meta has not yet given a number.