US Corporate Cash Rises to $2.3 Trillion as Firms Boost Growth Spending, Morgan Stanley Reports

U.S. corporate cash balances rose to $2.3 trillion in the first quarter of 2026, with companies aggressively deploying capital into business growth initiatives, a new Morgan Stanley report found. The analysis of Russell 1000 companies shows a significant increase in spending, even as key valuation metrics suggest markets are running hot.

Record Cash, Stretched Valuations

According to the brokerage, total cash and equivalents for Russell 1000 firms ticked up from the fourth quarter of 2025. This liquidity fueled a 27.1% year-over-year surge in capital expenditures to $1.3 trillion. Total operating cash flows for the quarter reached $3 trillion, resulting in free cash flow (FCF) of $1.7 trillion.

Despite the high absolute cash levels, analysts led by Todd Castagno noted that the cash-to-enterprise value (EV) ratio slipped to a 20-year low of 3.3%. Similarly, the free cash flow yield, which measures cash generation relative to market value, also hit a two-decade low at 2.6%, indicating that company valuations have grown faster than their cash generation.

A Focus on Self-Financed Growth

Morgan Stanley's report suggests a clear corporate strategy is at play. “Companies continue to pour money earned and raised into growth capex and consensus believes that margins will continue expanding,” the analysts wrote.

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The firm emphasized the importance of companies with strong free cash flow, describing them as “self-financing.” These businesses, the report stated, “may be better able to weather another downturn, deploying capital effectively and capturing any opportunities that may arise.”

Companies Highlighted by Analysts

Morgan Stanley identified several companies with strong balance sheets and cash generation prospects. The firm highlighted the following names based on specific financial metrics:

• Top-ranked by cash-to-EV ratio: Veeva Systems, UiPath, Elastic, Incyte, and HubSpot.
• Large-caps (>$50B) with robust cash levels: Airbnb and Nike.
• Top-ranked by expected FCF growth: Southwest Airlines, Ford, Coeur Mining, Hewlett Packard Enterprise, and Toll Brothers.
• Large-caps (>$50B) with strong expected FCF growth: DoorDash and Amgen.