The world’s most valuable companies are committing extraordinary sums to the infrastructure behind artificial intelligence, consuming billions of dollars in cash and putting pressure on an AI-driven stock rally as Wall Street grows more cautious.

The latest financial disclosures from four of the largest hyperscalers—Amazon, Alphabet, Microsoft, and Meta—as well as Elon Musk’s emerging AI business SpaceX, which includes xAI, show that the group could spend as much as $828 billion on capital expenditures in 2026. The spending is directed toward data centers, advanced chips, and other infrastructure needed to support AI services—physical assets that are paid for up front even as they are expected to serve operations for years.

According to company earnings releases and conference calls, the expected 2026 capital spending includes $220 billion from Amazon, as much as $205 billion from Alphabet, approximately $170 billion from Microsoft, up to $145 billion from Meta, and as much as $88 billion from SpaceX.

The combined figure exceeds the market value of well-known companies such as energy giant ExxonMobil and payments company Mastercard. It is also approaching the roughly $1 trillion the United States is spending on defense during the current fiscal year—the largest defense budget in the world. Several banks, including Evercore and Bank of America, expect AI-related capital expenditure to reach $1 trillion in 2027.

The scale of the spending contributed to a sharp stock-market decline on Friday. The Nasdaq and the S&P 500 both recorded their worst one-day performances since June. The technology-heavy Nasdaq fell 2.9%, while the S&P 500 declined 1.8%. Companies in the Nasdaq 100 lost more than $1 trillion in market value. Weak guidance from U.S. chipmaker Intel for the final three months of the year also contributed to the decline. Fortune’s report on the market selloff provided additional coverage of the move.

Pressure on free cash flow

Some of the market’s concern centers on free cash flow, which has historically been a major strength for Silicon Valley companies. That position has recently changed. Four of the five technology giants spending hundreds of billions of dollars collectively on capital expenditures reported negative free cash flow in the third quarter. Microsoft was the exception.

Negative free cash flow means the companies spent more on buildings, equipment, and other capital investments than they generated in cash from operations. As businesses that built their fortunes on software and services direct increasing amounts of money toward physical infrastructure, some are turning to debt or new share issuance to help finance the expansion.

A small group of technology stocks accounts for an outsized share of the S&P 500, so the success or failure of their investments could have significant implications for the broader market and the millions of Americans invested in it, many of them through index funds and workplace retirement plans.

Aleksandar Tomic, an economist and associate dean at Boston College, said the consequences could extend well beyond Silicon Valley if the infrastructure investments do not produce the expected results. He said the risks could increase as companies rely more heavily on debt to finance expansion.

Greater borrowing could raise the cost of capital for other businesses, while a downturn among major technology companies could spread through the wider economy.

“If these tech companies sneeze, the rest of the market would catch pneumonia,” Tomic told Fortune.

A costly bet

Microsoft’s recent financial results illustrate how the race to build AI capacity is affecting corporate decisions. For decades, the software company has been among the world’s largest generators of cash. It earned nearly $134 billion in profit during its latest fiscal year and generated almost $183 billion in cash from operations. At the same time, its cash spending on property and equipment increased by about 80% over that period.

Microsoft announced a $25 billion bond offering on Thursday, its first bond sale in more than nine years. The company said the proceeds would be used for general corporate purposes, which could include capital expenditures. Microsoft remained free-cash-flow positive in the latest quarter, unlike Amazon, Alphabet, Meta, and SpaceX, but it is still seeking additional funding as infrastructure costs rise. Microsoft’s announcement is available through the company’s official release.

Meta reported negative free cash flow of $2.1 billion in the latest quarter, compared with positive free cash flow of $10.6 billion during the same period a year earlier. On Monday, the company announced a plan to issue new shares and raise as much as $95 billion, providing additional funds that could be directed toward AI infrastructure.

Oracle, another major participant in the AI infrastructure race, is also using borrowing and other financing avenues to support its expansion. The company told investors this week that it does not expect to return to positive free cash flow until the second half of its next fiscal year, a period that would run from the six months before May 2028. Oracle said it then expects free cash flow to rise to at least $30 billion for the fiscal year ending in May 2029.

The potential AI payoff

For now, some major technology companies can point to evidence that customers are paying more for computing power. Google’s cloud revenue more than doubled in the latest quarter, while Microsoft’s Azure business grew 48% and Amazon Web Services expanded by about 39%.

Cloud providers earn part of their revenue by renting computing capacity to AI companies. If demand for AI continues to grow in the coming years, those operations could become an important source of revenue for hyperscalers. However, not all cloud revenue comes from AI, and higher sales alone do not establish that today’s enormous investments will generate adequate returns.

Anthropic, the company behind the Claude AI model, filed paperwork for an initial public offering this week. The filing helped lift the Nasdaq 0.8% on Monday and drew attention to more than $265 billion in future minimum purchase commitments, most of them related to cloud computing and other infrastructure services. Those commitments could benefit hyperscalers.

The broader strategy nevertheless requires companies to spend enormous sums now to build computing capacity they expect to need years into the future. That approach could prove prescient, but it also creates substantial short-term risks.

The central question for investors is whether AI will become profitable enough to justify the cost. If expensive data centers and chips fail to generate the profits companies expect, the consequences could extend beyond Silicon Valley to the U.S. economy and other markets, Tomic said.

“We do need infrastructure, we do need this capital, but, can they sustain it? I think that’s the big big question,” he said.

Amazon Chief Executive Officer Andy Jassy said his company has little choice but to continue spending. Amazon reported negative free cash flow of more than $42 billion over the past year. During the company’s third-quarter earnings call on Thursday, Jassy responded to an analyst’s question about whether it would be easier if the acceleration in demand and opportunity occurred over 25 years, allowing the company to spread its capital expenditures over that period.

“Would it be more convenient if this type of acceleration and opportunity happened over 25 years and you could spread the CapEx over 25 years,” Jassy said. “Yeah, it might be more convenient, but that’s not the world that we live in, and that’s not the opportunity.”

For readers tracking how the buildout unfolds, the near-term markers are concrete: whether Meta proceeds with its proposed share issuance, how Microsoft’s $25 billion bond offering is received, whether Oracle’s stated timeline for returning to positive free cash flow holds, and how 2026 spending compares with the up-to-$828 billion the companies have projected.

This story was originally featured on Fortune.com.