OpenAI, Anthropic likely to face a cash-flow wall in 2027: Brookings decode why Wall Street expects AI spending to slow

 A Brookings paper indicates that firms like OpenAI and Anthropic rely on tech giants for financing as internal cash flow struggles to meet rising investments, with changes expected by 2027 due to moderating spending growth.

The artificial intelligence boom is becomingreally expensive to finance, raising questions over how long companies can sustain the current pace of spending. A new Brookings paper by Columbia Business School professor Stijn Van Nieuwerburgh argues that the AI buildout is increasingly moving beyond the cash flows of the companies driving demand.

OpenAI, Anthropic rely on hyperscalers' balance sheets

The ability to attract outside capital depends heavily on the credit quality of companies contracting for computing capacity, according to Van Nieuwerburgh.

But despite being at the centre of the AI boom, “frontier AI firms such as OpenAI and Anthropic generally lack comparable standalone credit profiles.”

And hence, the financial burden of the AI buildout is increasingly being carried by companies such as Microsoft, Amazon, Google and Oracle—and by investors financing the data centres behind them.

Hyperscalers face a cash-flow constraint

The bigger concern is that the AI industry is moving towards a point where spending could exceed the cash generated by the companies funding the buildout.

“On current estimates, capex will surpass the five firms’ [Oracle, Microsoft, Amazon, Meta, and Alphabet's] combined operating cash flow for the first time in 2026,” Van Nieuwerburgh wrote.

“Internal cash generation remains substantial, but it is no longer sufficient to finance the projected pace of investment without greater reliance on external capital or financing structures that shift assets and obligations away from the operating companies’ balance sheets,” he added.

Why 2027 could be the inflection point

Wall Street analysts are already looking towards 2027 for signs that AI capital spending could begin to moderate.

Sanchari Ghosh