Investors shift focus to long-term returns from Big Tech AI spending

Wall Street spent the better part of two years throwing money at anything with “AI” in the pitch deck. Now the hangover is setting in, and investors are asking a decidedly more boring question: when does all this spending actually make money? The answer, according to major asset managers, is that the biggest tech companies are on track to collectively add roughly $340 billion to their annual operating cash flow by 2027. That’s the kind of number that makes even the most eye-watering capital expenditure plans look reasonable, if you squint hard enough and extend your time horizon. The capex reckoning Big Tech’s AI-related capital spending is projected to hit somewhere between $635 billion and $665 billion by 2026. To put that in perspective, global AI investments across all sectors are expected to exceed $1 trillion by that same year. The hyperscalers, Amazon, Microsoft, Alphabet, and Meta, are writing the checks that define the entire industry’s infrastructure buildout. Recent earnings reports from Microsoft and Amazon reinforced the narrative that demand for cloud services remains intense, with capacity constraints still limiting how fast these companies can grow. Richard Clode of...