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New York (CNN Business) -
Apple, Google and other large companies around the world continue to increase their huge piles of cash, a sign that corporations are increasingly nervous about how the highly contagious delta variant of covid-19 , it could hurt the world economy.
The world's largest nonfinancial companies had a record $ 6.85 trillion in cash on their balance sheets at the end of the second quarter, according to data from S&P Global Ratings. (Banks and other finance companies are often excluded from corporate cash lists because they are required to hold a lot of cash due to the nature of their day-to-day business operations.)
Second-quarter totals are up slightly from the end of 2020. Gareth Williams, global head of corporate research at S&P Global Ratings, estimates that the cash level could reach $ 7.1 trillion by the end of the year.
Tech giants, in particular, are hoarding cash.
Apple, Microsoft and Alphabet, which owns Google, together have $ 460 billion in cash on their balance sheets.
Amazon has almost $ 90 billion.
Facebook also has more than $ 64 billion.
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It's not just the tech titans that are hoarding cash.
Warren Buffett's Berkshire Hathaway has a gigantic mountain of cash that is growing even higher as the company struggles to find more investment opportunities.
Berkshire Hathaway had $ 144.1 billion on its balance sheet at the end of June, down from $ 138.3 billion.
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Businesses have also taken advantage of low interest rates to borrow more money, which has helped drive up both the cash and debt levels of front-line businesses.
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The fact that many of these companies are increasing their cash reserves is due, in part, to nervousness about the state of the markets and the economy.
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But many companies also want to use their cash to invest in the future.
"We thought companies would be starting to use their cash at the beginning of the year," said Christopher Harvey, Wells Fargo's head of equity strategy.
"But companies are spending on buybacks, dividends and mergers. The capital markets are very open," added Harvey.
"The cost of financing is incredibly cheap, so companies are issuing debt and the cash keeps piling up."
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According to another S&P report, companies outside of the burdened energy and materials sectors will spend $ 2.8 trillion on capital spending this year.
That would be a 15% increase to an all-time high, with tech and utility companies leading the way.
But now that the Federal Reserve is expected to start cutting its bond-buying program later this year and potentially raise short-term interest rates in 2022, there is a feeling that companies could stop using cash. to borrow more money.
Debt would be more expensive in a higher rate environment.
That means companies could start using their cash in other ways, such as increased investments and potentially more pay raises for employees.
All this despite growing concern about the delta variant.
The companies had accumulated an "unusual buttress" of cash, said Richard Lane, Moody's senior vice president.
That was due to liquidity concerns during the worst of the covid crisis.
But it may finally be time to ditch some of the cash instead of waiting on the balance sheet.
"What happened during the pandemic is that the big investment-grade companies were aggressive in refinancing debt or raising new money," Lane said.
"As we move into this year, I would expect cash levels to decrease slightly."
- CNN's Julia Horowitz contributed to this report.
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