Microsoft and Oracle face divergent risks as AI-driven spending exceeds projected operating cash flow increases by $194 billion.
Technology giants including Microsoft and Oracle will spend more on capital expenditures than they generate in combined free cash flow by 2027. From 2025 to 2027, annual operating cash flow is projected to rise by $340 billion, while capex increases by $534 billion, leaving a $194 billion gap.
Microsoft’s fiscal Q2 showed operating cash flow of $35.8 billion against $37.5 billion in capex, though conventional free cash flow remained positive at $5.9 billion. Q3 improved with $46.7 billion in operating cash flow and $15.8 billion in free cash flow, despite $30.9 billion in property and equipment spending. Oracle, however, faces a more immediate cash crunch, with fiscal 2026 capex reaching $55.7 billion.
Microsoft’s AI business now exceeds a $37 billion annual revenue run rate, but returns on Azure and Copilot remain uncertain as GPU costs rise and depreciation looms.