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How resilient is the AI trade?

November 26, 2025

Despite concerns about debt-fueled growth in the AI sector, the largest hyperscalers – Alphabet, Amazon, Meta, Microsoft, and Oracle – are funding their substantial capital expenditures (capex) primarily through strong operating cash flows, keeping the overall investment boom healthy with only a few outliers showing stress. However, “Oracle stands out as a clear outlier, needing debt issuance to fund capex due to negative free cash flow in three of the past four quarters,” said Garrett Melson, Portfolio Strategist, Natixis Investment Managers Solutions.

*Source: Portfolio Analysis & Consulting. FactSet. As of 11/12/25.

  • Aggregate capex for major hyperscalers is projected to exceed $650B by 2028, while operating cash flow estimates top $1T.* 
  • The narrative of an imminent debt-driven bubble appears overstated.
  • Meta’s underperformance may be linked more to concerns about capital allocation and direction than to financing risks, believes Melson.

Data shown for 2025-2028 are estimates.

A hyperscaler is a cloud service provider that operates large-scale data centers, offering vast computing, storage, and networking resources to enable businesses to efficiently scale operations.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

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