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Are FANNG outdated? Let's talk about Capex and Earnings in 2026

Deep Values

Well, imagine taking the Hoover Dam, the entire U.S. Interstate Highway System, and like the Apollo Space Program. Okay, wow. That is a lot of concrete and rocket fuel. Right. So roll all their inflation-adjusted costs together into one massive global initiative, and then hand the final bill to just four companies. Just four? Yeah. Because that is exactly what we are witnessing right now in Silicon Valley.

We are tracking a projected $630 billion capital expenditure deployment by Amazon, Google, Meta, and Microsoft, all set to be fully realized by 2026. It is staggering. I mean, this isn't just a standard upgrade cycle. No. It is an invisible, high-stakes infrastructure war. It really is. It represents this violent, secular shift in how capital flows through the modern economy. Because, you know, for a decade, the tech sector was completely defined by capital-light, high-margin software scaling.

Build it once, sell it a million times. Exactly. But now we are looking at heavy industry mechanics. I mean, if you track the capex-to-operating cash flow ratio for these four hyperscalers. Which is a crucial metric, right? Oh, absolutely. It is the metric. And the trajectory is just jarring. Like, we saw it hovering around a historical norm of maybe 40% back in 2023. Which is healthy. Very healthy. But then by 2025, that metric vaulted to 65%. Wow.

And it doesn't stop there. The forward models for 2026 suggest we are pushing an asymptote of nearly 90%. Wait, 90%. So almost every dollar of operating cash flow is just... Gone. Diverted directly into the furnace of artificial intelligence hardware. Which brings us to the core mission of our deep dive today.

Are FANNG outdated? Let's talk about Capex and Earnings in 2026

Read the full transcript

The candid version is on a podcast,
not the earnings call.

Are FANNG outdated? Let's talk about Capex and Earnings in 2026

Read the full transcript

The candid version is on a podcast, not the earnings call.

The candid version is on a podcast,
not the earnings call.