AI Build-Out — Spotting the 2027 Slowdown

Earnings season starts next week, and the big question hanging over it is not whether AI is real. It is when the build-out — the data centres, the chips, the machines that make the chips — stops speeding up. A slowdown in that spending would not be the end of the AI trade, and it could be a pause rather than a turn. But it would change which companies get paid.

Forecasters already expect the pace to ease. The six biggest cloud spenders put about $470 billion into capital spending in 2025, are expected to spend about $870 billion this year and about $1.3 trillion in 2027, according to S&P Global estimates reported by the Motley Fool. That is growth of roughly 85% this year and roughly 50% next year — still rising, but more slowly. Alphabet has said its spending will rise "significantly" in 2027 because demand still runs ahead of the capacity it can build.

So the useful question is narrower: what would show a cooling first? We follow ten signals in three places — the money going in, the order books along the supply chain, and the share prices. Today three point up, four are worth watching, two flash a warning and one reports next week.

1. The money going in

Capex growth. The first signal is the forecast itself: 2027 spending plans from Microsoft, Alphabet, Amazon and Meta when they report in late October. A cooling would look like guidance that comes in below the roughly 50% growth already expected, or the word "digest" replacing "supply constrained".

How it is paid for. On our AI credit stress board, the four largest spenders generated $149.6 billion of free cash flow over the last four quarters and took on $166.6 billion of net new debt; about 30% of their capital spending is now funded with borrowed money. That is not stress yet — interest is covered many times over — but it is the line to watch when spending grows faster than cash.

The builders that borrow. The data-centre operators funded by project debt — CoreWeave, Nebius, TeraWulf and Applied Digital — score 86 out of 100 on the board's stress scale. They burned $24.8 billion of free cash flow over four quarters and borrowed $31.2 billion. This group would feel a cooling first, because it has the least cash of its own.