Morgan Stanley predicts hyperscalers and neoclouds will post their most negative free cash flow in 2027, with cash burn approaching $600 billion. The bank forecasts total AI compute investment of approximately $1.58 trillion in 2027, about 14% above a baseline cash capex estimate of $1.388 trillion, representing a $195 billion gap. Hyperscalers have already issued approximately $255 billion in unsecured bonds, equaling about 30% of projected full-year capex. High-rated hyperscalers like Amazon and Google are expected to maintain strong borrowing capacity with an interest coverage ratio of around 30.7x, while Nvidia is expected to collect approximately $700 billion from the overall wave of AI investment.
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