The AI Investment Boom: When Will It Pay Off?

The second thing we talk about in the most recent report where we've been wrong was, we predicted two years ago that if the hyperscaler stocks underperformed for a significant period of time, we would expect that they would scale back on the capex. And they have underperformed because of the significant investment in capex and the negative impact on their free cash flow. But instead of cutting the capex, they've actually raised the capex. So, I think that calls into question the economics even more going forward. But the reality of it is that they've massively increased the capex despite the stocks underperforming, which is not what we expected.

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All of that said, I think the economics are still very much in question. And if anything, I'm probably as or more skeptical on the economics today than I was before, despite how incredible the technology is.

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Look, these are the fastest growing companies in the history of corporate America, right, on the top line. Now, again, the economics, the profits are flowing to the semiconductor companies. But from a top line perspective, these are the fastest growing companies ever.

facepalm

_{The bubble wobbles with billowing undulations as it grows}