All articles tagged with #capital expenditure
Market strategist Marko Papic warns that a sustained Iran-strait crisis could trigger a surge in capital spending that overbuilds capacity, potentially leading to disinflation or deflation by the 2030s as governments expand energy, AI-related infrastructure, and resilient supply chains faster than demand.
Alibaba reported a 75% year‑on‑year drop in June-quarter net income as AI-related capex jumped 75% to 67.7 billion yuan, even as revenue rose 9% to 268.95 billion yuan and cloud revenue climbed 45% to 48.4 billion yuan. AI‑related product revenue delivered triple‑digit growth for the twelfth straight quarter, though higher compute costs and overall capex raised concerns about returns, with free cash flow negative by 44.7 billion yuan. The stock fell roughly 4.6–5% in U.S. trading as Alibaba continues its full‑stack AI push and price increases for AI computing/storage products amid intensifying competition.
Intel said it plans to raise about $15 billion by selling new shares to help fund its expensive foundry expansion, riding a year-to-date stock rally that has nearly tripled the shares and outpaced peers; the funds would bolster higher capex, 14A manufacturing by 2028, and customers like Tesla, with underwriters allowed to buy up to $2.25 billion more shares.
Alphabet plans to raise up to $25 billion in investment-grade bonds to fund data-center and AI infrastructure, after boosting its 2026 capital expenditure forecast to $195–$205 billion. Q2 spending remained high as Google Cloud revenue surged 82% and backlog reached $514 billion, while free cash flow was negative (-$5.9 billion) despite substantial cash on hand. The move signals financing for an AI-driven expansion, but it raises questions about whether cloud revenue and margins will offset depreciation, energy and interest costs; the strategy’s durability depends on continued cloud growth, backlog conversion and monetization of AI products.
SpaceX reported its first quarter as a public company with $7.8B in revenue and $3.5B adjusted EBITDA, but its AI-related capex exploded to $15.8B in Q2 (up from $7.7B in Q1) as total capex reached $18.37B, raising questions about cash flow despite a rising ARR Musk has touted near $100B. The company teamed with Nvidia to design its AI-1 payload to boost datacenter-grade compute and named Nvidia as the exclusive supplier for its AI chip needs, while Starlink subscribers topped 12 million and EBITDA hit $2.60B. With a looming insider lockup expiration and a share-price drop of about 10%, investors weigh whether the AI rollout justifies the heavy spend.
SpaceX’s stock fell about 10% in premarket trading after quarterly capex jumped sixfold to $18.4 billion, largely for AI compute; Elon Musk raised the 2030 revenue target to $1 trillion, but investors remain wary of the pace and profitability of the investments. CFO Bret Johnsen said AI spending is efficient with a payback under a year as SpaceX positions itself as a cloud provider using Nvidia chips, even as the stock trades below its IPO price.
Goldman Sachs says the rally is broadening as Big Tech’s free cash flow comes under pressure from AI-related capex, fueling a rotation into a wider set of stocks and helping the equally weighted S&P outperform the cap-weighted index. With Meta and Alphabet guiding higher capex and a resilient economy boosting M&A, broad participation could persist even as cash flow remains subdued in tech.
Meta Platforms is aggressively expanding its AI infrastructure even as trailing free cash flow declines and capex remains very high. The company’s Meta Compute initiative includes large-scale data-center investments, such as a 1-gigawatt project with BlackRock to train models and power advertising and new products. With Q2 capex around $30 billion and full-year guidance of $130–$145 billion, Meta argues the AI demand wave underbuilt by the industry justifies the investment and could be monetized via its ad engine or third-party demand. Meanwhile, core ad revenue grew and engagement improved, offering early signs that AI spend could pay off, but investors should monitor whether the ROI from this spend translates into sustained cash flow and profits as the cycle unfolds.
Microsoft kept its 2026 AI data-center capex forecast unchanged despite higher memory-chip prices, a cautious stance that nonetheless sent its stock higher as investors rewarded a returns-focused approach boosted by Azure growth and Copilot adoption, even as rivals lift their AI budgets.
Amazon posted strong Q2 results with revenue of about $201 billion (above the $197 billion consensus) and saw its shares jump ~10% after hours as it raised its full-year capex guidance, with AWS demand outpacing spending and the AI investments viewed as supportive of long‑term growth.
Meta Platforms reported Q2 revenue of $61 billion (up 28% year over year) while net income declined 14% to $6 billion. The company raised its 2026 capital expenditure forecast to $130–$145 billion to scale AI infrastructure, models, data centers, and AI-powered products, signaling expectations of future returns from AI tools and APIs. However, free cash flow fell to $784 million—the lowest in about five years—due to higher infrastructure costs, prompting investor concern about the pace and timeline of AI-driven gains as the stock traded lower.
Meta logged a 91% plunge in second-quarter free cash flow to $784 million as AI investment accelerates, while revenue rose 28% to $60.8 billion, prompting a 10% after-hours stock drop. The company also raised 2026 capex guidance to $130–$145 billion amid plans to expand data centers, and faces ongoing legal scrutiny over youth-safety issues that could impact results.
SK Hynix posted a record Q2 operating profit up 557% year over year but fell short of lofty expectations, fueling investor concerns about whether AI-driven memory spending can sustain its rapid pace; the company said it will raise 2026 capex by about 50% to at least $31 billion to expand AI memory production, prompting price-target cuts from Barclays and Susquehanna as chip stocks drop on oversupply fears ahead of results from Microsoft, Amazon and Meta and amid ongoing rate worries.
Apple overtook Nvidia to become the world’s most valuable company as investors reward Apple’s restrained AI spending and approaching record-high stock. The shift comes as Apple’s capex trends lower while Nvidia pursues AI infrastructure investments; the move sets the stage for Apple’s upcoming earnings report and Tim Cook’s planned transition, with markets watching how Apple Intelligence may scale without widening margins.
Micron and SK Hynix shares rose in premarket trading after Alphabet’s earnings and higher capex guidance, with Google signaling 2026 capex of $195–$205 billion—boosting hopes that memory demand remains resilient and easing fears of a tech-spending slowdown, though Micron remains weak versus a broader monthly move and SK Hynix’s U.S. listing has brought outsized volatility.