The Big Tech playbook just flipped.
For years, these companies printed money with minimal physical infrastructure. Software scales beautifully. Now? They're pouring cash into data centers, chips, and AI infrastructure like they're building railroads.
CapEx as % of revenue:
• Meta: 43%
• Microsoft: 39%
• Google: 34%
• Amazon: 27%
All at record highs.
Markets noticed. All four are trading at lower multiples than a year ago. Makes sense — when you shift from asset-light to asset-heavy, you're changing the entire risk/return profile. Lower margins, higher capital intensity, longer payback periods.
The AI arms race isn't cheap. Question is whether the returns justify the spending, or if we're watching another cycle of overbuilding infrastructure before demand catches up.
History says: be careful when everyone's racing to build the same thing at the same time.
For years, these companies printed money with minimal physical infrastructure. Software scales beautifully. Now? They're pouring cash into data centers, chips, and AI infrastructure like they're building railroads.
CapEx as % of revenue:
• Meta: 43%
• Microsoft: 39%
• Google: 34%
• Amazon: 27%
All at record highs.
Markets noticed. All four are trading at lower multiples than a year ago. Makes sense — when you shift from asset-light to asset-heavy, you're changing the entire risk/return profile. Lower margins, higher capital intensity, longer payback periods.
The AI arms race isn't cheap. Question is whether the returns justify the spending, or if we're watching another cycle of overbuilding infrastructure before demand catches up.
History says: be careful when everyone's racing to build the same thing at the same time.
