The market is correct in the moment to voice concerns about how the rising cost of capital will impact hyperscalers' financial statements in 2027. That is because hyperscalers such as Oracle (ORCL) and Google (GOOG, GOOGL) will need fresh debt to fuel their AI infrastructure builds, with free cash flow likely going negative. JPMorgan strategist Mislav Matejka captured the situation perfectly in the two new charts below.Debt needed for AI build-outs.·JP MorganFree cash flow in focus.·JP Morgan Hyperscaler free cash flow is forecast to turn negative in 2027, which implies that funding from credit markets is likely to drive more of the AI build-out going forward.
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