According to the Bank of America Global Research Report, the total free cash flow of hyperscale cloud service providers over the next 12 months has plummeted to less than 100 billion US dollars, and capital expenditure has consumed 95% of operating cash flow, marking a historic flow of capital to semiconductor suppliers. In stark contrast, as of September 2026, the free cash flow of the three leading semiconductor manufacturers, Nvidia, Micron, and Broadcom, has soared to nearly $500 billion over the next 12 months. This huge differentiation stems from a wave of aggressive infrastructure construction: cloud giants such as Microsoft, Amazon, Alphabet, Meta, and Oracle drastically increased spending before the relevant revenue was realized. Bank of America Securities said that rising risk-free returns, widening bond spreads, and rising stock beta coefficients have boosted the weighted average cost of capital for cloud vendors, which jumped from 4% in 2023 to 10%, and financing pressure continues to increase. The market agrees that as revenue growth exceeds expenditure growth, cloud vendor free cash flow will correct in the second half of 2027. However, anticipated revisions in history suggest that this path is very risky. Since December 2024, the market's 2027 capital expenditure estimates for cloud vendors have increased by 81%, while the agreed forecast for AI-related revenue for the same period increased by only 24%. If the return on new investment fails to cross the 10% capital cost threshold, or if the progress of monetization of cloud services does not keep up with the speed of computing power and capacity delivery, cloud vendors will face long-term financial burnout, and stock valuations will be further pressured.

According to the Bank of America Global Research Report, the total free cash flow of hyperscale cloud service providers over the next 12 months has plummeted to less than 100 billion US dollars, and capital expenditure has consumed 95% of operating cash flow, marking a historic flow of capital to semiconductor suppliers. In stark contrast, as of September 2026, the free cash flow of the three leading semiconductor manufacturers, Nvidia, Micron, and Broadcom, has soared to nearly $500 billion over the next 12 months. This huge differentiation stems from a wave of aggressive infrastructure construction: cloud giants such as Microsoft, Amazon, Alphabet, Meta, and Oracle drastically increased spending before the relevant revenue was realized. Bank of America Securities said that rising risk-free returns, widening bond spreads, and rising stock beta coefficients have boosted the weighted average cost of capital for cloud vendors, which jumped from 4% in 2023 to 10%, and financing pressure continues to increase. The market agrees that as revenue growth exceeds expenditure growth, cloud vendor free cash flow will correct in the second half of 2027. However, anticipated revisions in history suggest that this path is very risky. Since December 2024, the market's 2027 capital expenditure estimates for cloud vendors have increased by 81%, while the agreed forecast for AI-related revenue for the same period increased by only 24%. If the return on new investment fails to cross the 10% capital cost threshold, or if the progress of monetization of cloud services does not keep up with the speed of computing power and capacity delivery, cloud vendors will face long-term financial burnout, and stock valuations will be further pressured.