The free cash flow of 4 hyperscalers turned negative in the July-September 2026 quarter. Microsoft remained in positive territory, while Alphabet, Amazon and Meta turned negative. The expansion of capital investment, its potential impact on the semiconductor sector, and trends in AI-related financing are also reviewed.
Following the earnings announcements of 4 hyperscalers, attention focused on movements in free cash flow, calculated by deducting capital investment from operating cash flow. Microsoft maintained positive free cash flow during the period, while Alphabet, Amazon and Meta reported negative free cash flow. The charts show the relationship between revenue, centered on cloud services, and capital investment, and point to the impact of intensifying competition in the cloud market.
The charts overall show that negative free cash flow among the 4 hyperscalers became evident in the July-September 2026 quarter, raising concerns about the impact of future capital investment trends on the semiconductor sector. Microsoft maintained positive free cash flow, and its Azure growth strategy is analyzed as a possible differentiating factor from its peers.
AI-related financing trends and market reactions were cited as factors, with effects also seen in share-price movements after the earnings announcements. The factors cited included large-scale financing involving SpaceX and Meta, equivalent to just under approximately ¥40 trillion, and continued funding from AI-related funds. This was viewed as affecting market capital flows.
In terms of share-price reactions, Microsoft traded near its record high, while the share prices of Alphabet, Amazon and Meta fell after their earnings announcements. These movements were said to reflect the market's caution over negative free cash flow and the impact of financing trends.