Philip Fisher taught us decades ago that the best businesses deliberately spend heavily on future growth — research, expansion, new lines — even when it crushes near-term earnings. He called it a feature, not a bug, as long as management had a genuine long-range plan.
Today's market is doing the opposite. It's punishing Amazon, Google, and Meta for turning free cash flow negative while they build AI infrastructure at scale. These companies are explicitly saying this capex is essential and will grow through 2027.
Fisher would recognize this immediately. The short-term cash burn is the price of building capacity they believe will compound for years. The market is fixated on the bill. Smart money focuses on the opportunity.
I've managed portfolios through multiple cycles. The best long-term returns came from backing quality companies making bold, necessary investments when the crowd was worried about near-term margins. Discipline matters — but so does conviction when the business case is sound.
Today's market is doing the opposite. It's punishing Amazon, Google, and Meta for turning free cash flow negative while they build AI infrastructure at scale. These companies are explicitly saying this capex is essential and will grow through 2027.
Fisher would recognize this immediately. The short-term cash burn is the price of building capacity they believe will compound for years. The market is fixated on the bill. Smart money focuses on the opportunity.
I've managed portfolios through multiple cycles. The best long-term returns came from backing quality companies making bold, necessary investments when the crowd was worried about near-term margins. Discipline matters — but so does conviction when the business case is sound.