Dan Ives, managing partner of Yorkville, said free cash flow at Microsoft (MSFT), Meta (META), Alphabet (GOOG, GOOGL) and Amazon (AMZN) could bottom in the first half of 2027 and recover over the following six months, with gains accelerating in 2028 and rising more sharply in 2029 and 2030. He expects capex growth at these Big Tech and hyperscaler firms to peak in 2027, earlier than his previous view of 2028 or 2029, and says the four companies could still spend more than $1 trillion on capex in 2027. Ives also forecasts debt and equity financing, including at-the-market offerings, to fall about 25% over the next year. Earlier, he warned of a 10% to 12% correction in the Philadelphia Semiconductor Index (SOX) after the Democratic midterm sweep and estimated that 10% of planned data centers might not be built.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
AI investmentsemiconductorsMSFTMETAAMZN
Open a keyword to see other news on the same topic.
Related tickers and likely impact
MSFT
▲ Likely positiveMicrosoft
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 11/04/2026 | 556.03 |
| Change that session | +6.73% |
META
▲ Likely positiveMeta Platforms
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $1.6T |
| Close on 11/04/2026 | 629.89 |
| Change that session | +1.43% |
AMZN
▲ Likely positiveAmazon
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Consumer Discretionary |
| Industry | Broadline Retail |
| Market cap | $2.6T |
| Close on 11/04/2026 | 266.14 |
| Change that session | +6.16% |
GOOGL
▲ Likely positiveAlphabet Inc. (Class A)
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $3.5T |
| Close on 11/04/2026 | 288.99 |
| Change that session | +3.20% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Cracks are emerging in the AI spending boom
Investors are growing nervous about AI infrastructure spending, even as Alphabet, Amazon, Meta and Microsoft plan to spend more than $740 billion on capital expenditures this year. The Nasdaq fell 2.9% on Friday, with chip stocks hit hard and Qualcomm down 11%. Alphabet plunged 12% on Thursday, wiping out $500 billion in market value, and reported negative free cash flow of $9.1 billion in the third quarter while expecting to spend up to $205 billion this year, as its Search advertising growth slowed to 12% amid the rollout of AI Mode. Amazon posted negative free cash flow of $42.4 billion over the past 12 months despite 39% AWS growth, and Meta reported negative free cash flow of $2.1 billion in the third quarter even as ad revenue rose 26%. Negative cash flow, mounting debt and doubts about whether these investments will pay off are weighing on market sentiment.
- Big Tech Earnings Face a $600 Billion Question: Is AI Spending Paying Off?
U.S. stocks rose Monday, helped by enthusiasm for AI, but this week's earnings from Alphabet, Microsoft and Amazon will test whether that optimism holds under closer scrutiny of the technology's enormous costs. The three companies have nearly $1.7 trillion in combined backlog and plan to spend as much as $600 billion this year. Investors now want to know whether that spending is paying off.
- Big Tech Earnings Are a No-Win Test as Investors Punish Both Capex Cuts and Hikes
- Big tech is wobbling. Goldman Sachs says it's time to buy these 23 unloved stocks instead.
Goldman Sachs says consumer-facing laggard stocks offer the best way forward. The bank cites slowing earnings growth next year and struggling big tech stocks as the reasons.
- This Is the Only Number Investors Need to Watch Before Buying an AI Stock
Cloud revenue rose 103% at Alphabet (GOOGL) and 39% at Amazon (AMZN), showing AI is driving real growth, but the article argues free cash flow should be checked first because infrastructure spending consumes cash now while returns arrive years later. In the third quarter, Amazon reported $20.7 billion in net income, yet its $42.4 billion operating cash flow fell short of $75.9 billion in net equipment and property spending, leaving roughly negative $33.5 billion in free cash flow. Among the four AI spenders, Microsoft (MSFT) retained about $0.32 of each operating cash-flow dollar after capital spending, while Alphabet's spending exceeded operating cash for a second straight quarter, though these companywide figures do not isolate AI profitability. Amazon's quarterly interest expense rose from $538 million to $1.7 billion, and Microsoft's quarterly free cash flow fell about 27% from $25.7 billion a year earlier but stayed positive.
- Google, Microsoft, and Amazon have to justify the AI spending boom this week
Google, Microsoft and Amazon report quarterly earnings this week, and the key question is how well their AI spending pays off compared with expected returns. These companies, which lead a week of results accounting for more than a third of S&P 500 earnings, face the same scrutiny Meta faced. Bank of America said hyperscalers' 2027 capex estimates have already been revised up by nearly 90% year to date. Competition for capital is intensifying as AI labs prepare large IPOs and businesses scale back AI spending and use cheaper models, making it more important to justify AI costs.
Related markets
Latest news
- Democrats to probe JPMorgan's relationship with Epstein when they take Senate control
Senate Democrats plan to investigate JPMorgan Chase's banking relationship with Jeffrey Epstein once they take control of Congress early next year, according to a source who spoke to CNBC. Staff on the Senate Finance Committee, likely to be chaired by Sen. Ron Wyden, intend to focus on how senior executives handled Epstein, particularly decisions by Mary Erdoes, CEO of the bank's Asset & Wealth Management business. JPMorgan did not immediately respond to a request for comment, and the probe has not been formally announced. Wyden has said he plans to make full use of the committee's subpoena powers.
- Apple Makes Surprising Move to Rein In AI Spending
Apple has lowered the daily AI tool spending allowance for some engineers to $200 from $300 last month, according to Bloomberg, and is considering cutting it to as little as $100 for some engineering teams. Some non-engineering groups already have $100 daily caps, and certain teams could be limited to $25 per day, with exemptions available from senior executives. The budgets cover AI tokens used via tools such as ChatGPT, Claude and Gemini. Bloomberg reported Apple is still expanding AI use across engineering and internal operations while tightening controls, including encouraging cheaper models and on-device AI. The article links this to a wider industry review of whether productivity gains justify rising token costs, citing Goldman Sachs restricting some AI coding tools.
- Republicans Suffer Heavy Defeat: Could the Diesel Oil Deal Already Be in Ruins While Trump Is Still in Office?
Financial Times sources say two of three Russian diesel tankers bound for the U.S. have diverted, raising doubts about the U.S.-Russia diesel deal. After the midterms, bipartisan lawmakers opposed lifting sanctions, Representative Gregory Meeks introduced a bill to block corrupt oil deals with Russia, and New Jersey Governor Mikie Sherrill warned that docking Russian tankers violates federal law. A third tanker is due in New York this weekend but could also divert. Yet U.S. fuel supplies have fallen below 100 million barrels, the lowest in over two decades, and Russian supply could ease price pressure; even if the bill passes, the President could veto it, and two-thirds of votes would be needed to override. Bloomberg, citing a source close to the Kremlin, says Russia could win more concessions, while The Conversation notes Trump, in office until 2028, retains broad foreign-policy powers.
- Meta's AI Buildout Runs Into a Political Problem
Meta President Dina Powell McCormick said at the Wall Street Journal Tech conference that the U.S. midterm results could make building new data centers significantly harder, while expanding existing campuses may be easier. Voters rejected or restricted nearly all of the 41 data-center-related ballot measures tracked across multiple states, and Democratic governor wins in Texas, Georgia and Ohio came with promises of tougher AI infrastructure scrutiny. Texas, which accounts for roughly a quarter of planned U.S. data-center capacity, has a governor-elect who called for a pause on new approvals until electricity, water, environmental and local concerns are addressed. Needham argues tighter rules could improve returns on invested capital for established hyperscalers such as Meta, Amazon and Google by slowing new supply. After the election, large tech stocks rallied while smaller data-center developers sold off.
- Jim Cramer's top 10 things to watch in the stock market Thursday
Cramer's Thursday list notes Dow futures rising and Nasdaq futures falling after a midterm-driven rally, following Wednesday's Nasdaq gain of nearly 1.5% and 3% jump in the Dow, even as key tech stocks fell on worries about the data center buildout. Qualcomm fell 10% on a weak forecast and Arm 7% after its post-earnings decline, while Snap dropped 11% after daily users fell year over year. HP named former GSK chief Emma Walmsley as CEO, and Citi raised its Stanley Black & Decker price target to $140 from $107. Cardinal Health beat expectations and raised its full-year profit outlook, and McDonald's rose 6.5% after earnings with several price target hikes, while Dutch Bros fell more than 11% on light comps, slowing traffic and a trimmed full-year outlook.
- Barkin sees interest rate hikes ahead, but at a gradual pace
Richmond Fed President Thomas Barkin said Thursday that the central bank will need to raise interest rates further, though he is unsure by how much or at what pace. In a CNBC interview at the Richmond Fed's 2026 CFO Summit, he voiced concern over inflation, saying unemployment is near record lows while inflation is too high. He said a gradual pace still makes sense given the uncertainty, and called inflation the most important risk right now. The Fed's benchmark rate is held at 3.75%–4%, and markets price a better than 80% chance of a December hike, according to CME Group's FedWatch tool.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.