Analyst Dan Ives of research firm Yorkville Ives & Co. now believes the cash squeeze at Microsoft (MSFT.US), Meta Platforms (META.US), Alphabet (GOOG.US), and Amazon (AMZN.US) will end sooner than he previously expected.

In a post on X, he wrote: "The capex growth rate for big tech will now peak in 2027, whereas our prior view was that it would peak in 2028 or 2029." He cited the midterm election results, especially in Texas, where data center construction is expected to slow.

In a follow-up post, he tied this to cash: "Free cash flow will bottom in the first half of 2027, begin a trajectory toward a sharp rebound in the second half of next year, and see a massive climb in free cash flow from 2029 to 2030."

Industry research analyst Mandeep Singh provided specific figures. In a November 4 podcast, he referenced Texas data centers and said: "2027 capex could be revised down by 5% to 7%."

Microsoft's data already shows this trend

Microsoft's fiscal year ends in June, so its fiscal 2027 includes the first half of 2027 that Ives sees as the bottom. Analysts expect free cash flow to fall to $34 billion that year, roughly half of the $67 billion in fiscal 2026, before rebounding to $52.3 billion in fiscal 2028.

Microsoft's free cash flow in the September quarter already fell to $18.6 billion from $25.7 billion a year earlier; the day after that earnings release, the company issued $25 billion in bonds, its first foray into the U.S. investment-grade market since 2017.

Among the five largest hyperscalers, including Oracle, Microsoft is the only one whose free cash flow remained positive in the third quarter.

Amazon and Meta face deeper gaps

By TIKR's methodology, Amazon's free cash flow fell from $32.9 billion in 2024 to $7.7 billion in 2025. Meta's spending on property and equipment nearly doubled from $37.3 billion to $69.7 billion in 2025.

Meta's third-quarter capex, including principal payments on finance leases, rose 80% to $34.9 billion, exceeding the $32.8 billion generated by its operating activities; on October 26, the company said it planned to sell up to $95 billion in stock. Data shows Alphabet burned $9.07 billion in cash in the quarter.

The full return remains a 2029 story

Heath Terry, global head of technology and communications research at Citi, said he views the cash drain as a one-time "catch-up": "We believe the crossover point comes in 2029, when the scale of cash-generating assets will exceed the incremental cost of new assets."

JPMorgan's Doug Anmuth expects Amazon's 2027 capex to reach $395 billion, up 77%; and $476 billion in 2028, up 20%. This puts Amazon's capex growth peak in 2027, consistent with Ives' view, but still leaves a large cash gap to fill.

The bottom of spending

Ives and Terry are describing the same curve. Ives puts the bottom in early 2027; Terry points to 2029, when new data centers generate more cash than the cost of the next round of investment.

Slower capex growth would make both points easier to reach. Microsoft is one company that could follow this path: its free cash flow has never turned negative, and analysts expect a rebound. Amazon and Meta still have to prove themselves.

2027 capex plans will be disclosed alongside earnings in early next year. If Texas construction slows less than Ives expects, the peak could be pushed back to 2028.