Big Tech AI spending is eating free cash flow
Five charts to start your day
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CHART 1 • Big Tech AI spending is eating free cash flow
Free cash flow is the money left after a company has paid its running costs and investments. In this case, it shows who is getting paid by the AI buildout and who is carrying the cost.
This Semafor chart compares four-quarter average free cash flow for Amazon, Alphabet, Meta, Microsoft and Oracle (the hyperscalers) with semiconductor companies including Nvidia, Micron, Applied Materials and Broadcom. Bank of America expects supplier free cash flow to rise towards about $120 billion, while the buyers’ free cash flow falls towards zero.
The semiconductor companies get cash as data centres are built. The cloud platforms have to spend before customers have proved how much they will pay for AI services. The buildout can be real and still drain cash from the companies building it.
Source: Semafor
Free cash flow puts timing back into the AI debate. The chips are bought now; the revenue needed to justify them has to arrive later.
Paid subscribers get access to the other four charts: Nvidia’s data-centre revenue, S&P 500 concentration, SpaceX analyst targets and long US stock-market returns. Together, they show why AI enthusiasm still has to pass through cash flow, revenue concentration, valuation discipline and drawdown risk.
