Forrester’s AI Bubble Model Shows Builder Health Still Green but Declining

Supply Pressure Hits Record While Demand Lags

Forrester’s AI Bubble Model juxtaposes “supply pressure” – capital spending as a share of revenue across nine AI compute providers – with “demand absorption,” which gauges delivered economic value. In Q2 2026 the supply metric reached 4.95, the top of the scale, while demand absorption rested at 3.44, only modestly above its normal baseline of 3. The gap signals that capacity is expanding faster than the value businesses are extracting from AI.

Builder Health Remains Green but Slides

Health scores combine six financial indicators from filings and share prices. The nine companies tracked earned an aggregate 82 / 100 in Q2 2026, above the green threshold of 73. However, the score has slipped from 97.7 in Q2 2025. A weekly “nowcast” refreshed on 2 Nov placed the health index at 79.1 (range 77.7-81.4), down from 82.1 on 29 Oct. Amazon’s filing and CoreWeave’s share price were primary contributors to the decline.

Cash Cushion Thins as Builders Tap Debt and Equity

Quarter-two data reveal that Alphabet, Amazon, Meta and Microsoft largely funded their build-outs with operating cash in September, but the third-quarter filings show that cushion eroding. Amazon spent $77.3 bn versus $42.4 bn of cash, raising $48.1 bn in bonds and a potential $80 bn supplier facility. Meta’s outlay exceeded cash by $1.2 bn, prompting a $25 bn forward share sale and $12.5 bn of convertible preferred stock, while NVIDIA and AMD pledged $3 bn and $1 bn respectively to help fund the chips they sell. Oracle’s over-cash spend rose to $1.61 per operating dollar, accompanied by $10 bn of new stock and $10 bn of notes, and its shares fell 51 % from a 12-month high.

Model Excludes Private Labs but Tracks Their Impact

The current basket omits private AI labs such as OpenAI and Anthropic. When Anthropic filed its S-1 on 26 Oct, Forrester loaded the data into a separate AI lab tracker, which feeds into the health watch but does not alter the public-company scores. Future public listings will expand the model’s coverage.

Our read: Forrester’s model confirms that AI supply is expanding at an unprecedented pace while the financial footing of the core builders shows early signs of stress, making the health score the most actionable leading indicator for enterprises planning AI spend.