European regulators warn that surging artificial intelligence investments and stretched technology valuations increase the risk of sharp market corrections if investor sentiment shifts. According to a risk report published by the European Securities and Markets Authority (ESMA) on September 10, a growing mismatch between market optimism and a fragile macrofinancial environment threatens broader financial stability.
At the center of regulatory concern are the capital expenditures committed by major technology firms building out artificial intelligence infrastructure. Amazon, Alphabet, Microsoft, and Meta are projected to spend more than 700 milliards de dollars collectively on investments in 2026, up from un peu plus de 400 milliards in 2025, according to analyst estimates compiled by financial institutions.
Hyperscaler Capital Expenditures Reach Historic Highs
Individual spending targets underscore the massive scale of the current artificial intelligence infrastructure buildout. Amazon expects capital expenditures to reach approximately 220 milliards, while Alphabet targets between 180 et 190 milliards. Microsoft plans to spend about 175 milliards, and Meta projects expenditures between 130 et 145 milliards. Several industry projections suggest combined spending could surpass 1 000 milliards de dollars by 2027.
“The results of the hyperscalers remain excellent and the expenses linked to AI continue to accelerate. The real question bears on the return on invested capital,” says Eric Bleines, deputy general manager of Swiss Life Gestion Privée, pointing to a distinct shift in corporate funding regimes.
While major technology firms continue to generate substantial cash flow, their data center expansion increasingly relies on external debt markets. Amazon, Alphabet, Meta, and Oracle issued nearly 200 milliards de dollars d’obligations in bonds by early July, based on LSEG data analyzed by Reuters. Goldman Sachs estimated that the five major hyperscalers, including Microsoft, could issue roughly 250 milliards de dollars in debt during 2026.
Shift in Corporate Balance Sheets and Cash Flows
Corporate balance sheets reflect varying exposures to this capital-intensive strategy. Alphabet reported long-term debt of 98,2 milliards de dollars at the end of June, compared to approximately 17 milliards at the end of 2025. During the same period, the company raised roughly 85 milliards de dollars in equity, marking a departure from its historical practice of returning capital to shareholders.
Meta absorbed the cost of accelerated investments directly within its cash flows, raising nearly 25 milliards de dollars in debt in May while halting share buybacks during the first half of the year. Meta’s free cash flow dropped to $784 million in the second quarter. Amazon, carrying the largest investment budget among the four groups, saw its trailing twelve-month free cash flow fall into negative territory. Microsoft maintains strong cash generation but has elevated its capital investments to historic levels.
Market analysts emphasize that corporate solvency is not currently in question, as these firms remain highly profitable. “The subject is not the quality of the companies nor the absence of growth,” notes Eric Bleines. Instead, capital expenditures consume a larger share of operating cash, forcing firms to offer higher yields on corporate debt to attract buyers.
Valuation Risks and Macroeconomic Sensitivity
Bond market emissions tied to artificial intelligence currently offer a higher premium than the broader corporate market, indicating increased investor selectivity. Long-term interest rates represent a primary risk factor for growth valuations. Because technology valuations rely heavily on projected future earnings from artificial intelligence, sustained high interest rates reduce the present value of those expected profits.
“Valuations of growth values are very sensitive to this type of variation, it’s one of our principal zones of vigilance,” explains Eric Bleines, warning that any revenue disappointments could compress valuation multiples without requiring an economic recession.
For European investors, a potential market correction in the United States carries spillover risks due to strong cross-border asset correlations. However, structural risks remain more concentrated in U.S. markets, where valuations and mega-capitalization exposure are significantly higher than in Europe.
Key Takeaways
- Surging Expenditures: Combined capital investments from Amazon, Alphabet, Microsoft, and Meta are projected to exceed 700 milliards de dollars in 2026.
- Debt Reliance: Major technology firms are increasingly tapping bond markets, with projected debt issuances reaching up to 250 milliards de dollars.
- Cash Flow Pressure: Heavy capital spending has reduced free cash flow for firms like Meta and pushed Amazon’s trailing free cash flow into negative territory.
- Valuation Vulnerability: Regulatory authorities and market analysts warn that any shortfall in artificial intelligence revenue could trigger sharp valuation multiple contractions.
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