Moody's Warns AI Spending Threatens Credit Quality of Major Firms

Moody's Ratings reported that the increase in artificial intelligence infrastructure spending, projected to hit $1 trillion annually, is impacting the free cash flow and balance-sheet risk of major companies like Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT). Direct debt for the six companies tracked by Moody's has risen to approximately $460 billion. Lease commitments related to data centers have surged to $1.2 trillion, with over $820 billion from leases not yet started, indicating substantial future obligations. This shift to asset-heavy models may pressure their investment-grade ratings, although these companies still maintain strong balance sheets.