Live Markets-AI buildout increasingly fueled by debt, says Carson Group
NVDA•Free cash flow pressure builds as chipmakers gain
As spending ramps up, free cash flow at major cloud companies including Meta, Amazon, Alphabet, Microsoft and Oracle has been squeezed, while chipmakers such as Nvidia, Broadcom and Micron have seen cash generation soar.
Off-balance-sheet commitments make AI spending appear larger
Varghese also argues AI spending is far larger than headline capex figures suggest because much of it sits off-balance-sheet. Citing Wall Street Journal reporting, he said nine major technology companies have roughly $3 trillion in AI-related commitments, including leases and purchase obligations, compared with about $600 billion of reported capex over the past year.
While he does not view these financing structures as inherently problematic, Varghese cautions that as debt replaces cash flow as the marginal funding source, the pace of AI investment will become increasingly tied to credit-market conditions.
