Morgan Stanley has revealed that five hyperscale cloud providers, along with chip giants NVIDIA and Broadcom, have collectively pledged more than $3.1 trillion in guarantees, leases, and other forms of financial backing to help other companies advance their AI infrastructure spending.

The five hyperscalers are Alphabet, Amazon, Meta, Microsoft, and Oracle. A team of analysts led by Todd Castagno noted in a report that Alphabet holds the largest commitment at $890 billion, primarily tied to procurement agreements.

These companies' cash capital expenditures are projected to exceed $1.2 trillion by 2027, while expected cash flows stand at roughly $1 trillion. Morgan Stanley estimates that over 40% of hyperscaler sales revenue is being redirected into AI capital spending.

Alphabet and Amazon saw their free cash flow drop below zero in the second quarter, with Meta expected to follow suit this quarter. The report states: "As free cash flow turns negative, hyperscalers are increasingly turning to leases, debt issuance, paused share buybacks, and equity offerings to fund their compute expansion targets."

Morgan Stanley also noted that as capital expenditures become increasingly financed by debt rather than cash, the economics of these projects will depend more heavily on external capital costs.