For months, the narrative across financial media was that AI infrastructure spending had peaked. Too much capital poured in too fast, with no returns in sight.
Wall Street was rotating out of chips. The fear was real.
But then, earlier this week, Big Tech reported earnings… and the narrative fell apart.
The sector had one of its best quarters in years. More importantly, the numbers prove AI spending isn’t slowing down anytime soon.
Let’s take a closer look.
Putting AI capex in perspective
Start with the number that matters most: capital spending.
Amazon (AMZN) and Alphabet (GOOG) are each on track to spend roughly $200 billion annually on CapEx.
To put that number in perspective, only about 50 companies in the entire S&P 500 are worth more than $200 billion.
In other words, these companies are spending more in a single year than most large-cap companies are valued at.
And it’s not slowing down. Microsoft (MSFT), Alphabet, Meta (META), and Amazon all raised capex guidance.
Now, you might be tempted to dismiss that massive spending as speculative…
But the underlying businesses tell a different story:
- Google’s cloud business continues to accelerate at a remarkable pace
- Meta is still growing revenue north of 30%—at massive scale
- Amazon is seeing enormous demand tied directly to AI infrastructure
And importantly, they’re generating billions in free cash flow even after their investments.
That’s a key distinction from past bubbles, when companies spent first and hoped profits would follow.
Today, profits are already here… And they’re being reinvested to capture an even bigger opportunity.
The real opportunity
Owning Big Tech here makes sense. These are dominant companies with strong growth and massive resources.
But the more interesting opportunity lies beneath them. Every dollar those hyperscalers commit flows downstream into:
- data centers
- chips
- power systems
- cooling and networking
Each of these areas is seeing real demand backed by real dollars.
If you want the best way to play this trend, focus on megawatts. Data centers require enormous energy—and right now, supply isn’t keeping up. The companies that control power capacity are sitting on one of the most valuable assets in the AI buildout.
On yesterday’s Wall Street Unplugged Premium, Frank revealed 2 stocks sitting on incredible power assets. Get the names as soon as you start your membership.
The bottom line
The market thought AI infrastructure spending had peaked… But Big Tech’s earnings just proved it hasn’t.
If you own this space, stay patient. If you don’t… the window just reopened.
