Major technology companies’ dependence on borrowing and stock sales to fund artificial intelligence stands out as a risk in Nomura Securities’ outlook, while the firm says 2027 memory volumes and prices are largely set.
In its Oct. 23 analysis, Nomura puts the likelihood of continued AI investment at about 75%. It assigns a 20% chance to a spending slowdown and 5% to a financing failure. Under its central scenario, large technology companies continue supporting AI research and training with borrowing and stock sales.
Nomura’s Oct. 23 analysis said October negotiations largely set 2027 memory supply volumes and price ranges, with demand exceeding planned supply. Breaching an agreement could cost a party 50% to 100% of its annual demand value. Nomura expects the agreements to support memory producers’ 2027 revenue and limit potential price declines.
Nomura estimates Meta, Alphabet, Amazon and Microsoft will spend more than $700 billion combined on capital projects in 2026. The firm says operating cash flow covered their capital spending before 2025, while stock and bond sales are helping cover the gap in 2026.
Nomura reports negative free cash flow of $2.1 billion for Meta in the third quarter and $5.9 billion for Alphabet in the second quarter. Amazon’s was negative $7.6 billion over the trailing 12 months. Reporting periods differ. For Microsoft, Nomura cites $19.6 billion in fourth-quarter free cash flow and expects it to turn negative later.
Nomura says a failure to raise debt or equity could bring its most severe scenario: a hard landing or financial stress. It expects memory tightness to persist through 2028, while added supply and power constraints may ease the market from that year. Nomura said power bottlenecks were more likely to delay projects than cancel them. It also said shortages could postpone chip deliveries. Nomura lists inventory growth and weaker follow-on orders among the risks, and says future agreements will define 2028 volumes and prices within limited ranges.
