Looking at a recent set of data, it feels like the entire tech industry has gone crazy. The major cloud computing companies in the US are now allocating up to 20% of their revenue to capital expenditures, the highest in history, more than double the 7-10% during 2013-2020.

The specific numbers are even more staggering: Amazon, Microsoft, Google, Meta, and Oracle will together spend $443 billion on capital expenditures in 2025. Imagine that—an increase of 73% year-over-year. And next year? They plan to ramp up further, reaching $602 billion, a 36% increase. About three-quarters of this, roughly $450 billion, will be invested in AI infrastructure.

The problem is: these companies' capital intensity has become unreasonably distorted. Microsoft’s is at 45%, and Oracle’s is even more extreme at 57%. What does this mean? Their free cash flow is being severely squeezed. To fill this gap, tech giants issued $108 billion in bonds in 2025 alone, with total bond issuance plans over the next few years reaching an astonishing $1.5 trillion.

This is not just a normal investment cycle adjustment; it’s a fundamental shift in the industry’s business model—from the golden era of "light assets, high profits" to a "heavy capital, betting on the future" approach. It sounds ambitious, but risks are also present: if AI commercialization doesn’t meet expectations, the valuations of these companies could face a systemic revaluation.