Peter Smith
⬤ Big Tech's AI spending spree is starting to reshape company finances in a meaningful way. Recent Wall Street Journal analysis shows growing pressure on balance sheets as Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL) pour more resources into AI infrastructure. Data from S&P Capital IQ and FactSet reveals cash levels dropping while capital expenditures climb through 2025.
⬤ Cash and short-term investments as a percentage of total assets have fallen dramatically from 2020 to Q3 2025. Google dropped from over 40% to the low-20% range. Microsoft saw a similar decline from more than 40% down to around 20%. Amazon slid from the mid-20% range to the low-teens. These trends point to what the WSJ describes as a cash drain that's "started to make a dent in those companies' balance sheets."
⬤ Capital expenditure data tells the other side of the story. All three companies show rising capex from 2020 through 2025 forecasts, with Microsoft projected to hit the highest spending levels, followed by Alphabet and Amazon. Cumulative net income is growing too, but it's not keeping pace with capital demands. The WSJ notes that "weaker cash balances, less cash flow, more debt" are beginning to "fundamentally alter the tech-company business model." The numbers show just how much AI infrastructure is reshaping spending priorities.
⬤ The combination of shrinking cash ratios and expanding capital expenditures highlights how deeply AI investment is changing the financial structure at AMZN, MSFT and GOOGL. With liquidity getting tighter and spending commitments climbing, these companies are navigating a significant shift in how they allocate resources and manage long-term strategic pressures.
Peter Smith
