Market risks are escalating as free cash flow for major hyperscalers, including META, AMZN, MSFT, and GOOG, is projected to decline by 75-80% to between $35 and $50 billion for fiscal year 2026, primarily due to increasing AI-driven capital expenditures. This sharp reduction raises concerns over elevated valuation multiples, particularly as the Shiller PE ratio has reached 39.90, indicating that equity valuations are reminiscent of the peak during the Internet Boom. Additionally, the U.S. federal government faces significant debt refinancing of approximately $10 trillion in 2026 at higher rates, which is expected to increase interest costs and constrain other spending needs.
U.S. federal debt refinancing to hit ~$10 trillion in 2026, raising interest costs
