Nomura Sees About 75% Chance AI Race Continues as 2027 Memory Deals Lock Supply

Nomura Securities’ Oct. 23 analysis assigns about 75% odds to continued AI investment, saying 2027 memory deals have largely set supply and price ranges as major U.S. technology companies face cash flow strain.

In its base case, large technology companies keep funding AI research and training through borrowing and stock sales. Nomura expects semiconductor revenue to continue growing, though at a slower rate after a period of rapid expansion. It puts the chance of a spending slowdown at about 20% and financing failure at about 5%.

The analysis cites negative free cash flow of $2.1 billion at Meta in the third quarter, $5.9 billion at Alphabet in the second quarter and $7.6 billion at Amazon over the trailing 12 months. Microsoft generated $19.6 billion in its fourth quarter, but is expected to turn negative later. The figures cover different reporting periods. Nomura places the four companies’ combined 2026 capital spending above $700 billion.

Before 2025, operating cash flow covered capital spending. In 2026, new stock and bond sales are filling the gap. Nomura identifies failed debt or equity issuance as a trigger for its most damaging scenario: a hard landing or financial stress.

October negotiations set memory supply volumes and price ranges for 2027, with demand exceeding planned supply. Breaching the agreements carries penalties equal to 50% to 100% of annual demand value. Nomura says the contracts protect memory producers’ 2027 revenue and establish a floor for prices. The deals add detail to Nomura’s outlook for a memory-chip shortage through 2028.

From 2028, added supply and power constraints may loosen the market. Nomura says future agreements will also set 2028 volumes and prices within limited ranges. It sees power bottlenecks as more likely to delay projects than cancel them, while shortages could also postpone chip deliveries. The analysis flags inventory buildup and weaker follow-on orders as risks.