Microsoft, Alphabet, Amazon and Meta have a new hobby. It costs trillions. It has no finished product. It needs a sponsor.
The sponsor is Excel.
Also search ads. Also cloud storage. Also the little blue button that renews your Office subscription while you sleep. The legacy businesses are now the parents co-signing the kid's lease on a data center the size of Delaware.
Free cash flow is taking the hit. That is the money companies used to hand back to shareholders. Now it becomes concrete, copper wire, and Nvidia invoices. Shareholders get a slide deck about "long-term optionality."
Optionality. The same word your cousin used before the boat.
The pitch is simple. Spend like a nation-state. Fund it with the boring stuff. Hope the chatbot eventually pays rent. Until then, Outlook is working a double shift.
Retail traders love this. They read "hyperscaler capex" and feel like they work in infrastructure. They own two shares of Amazon and call it "my position in the AI buildout." You own a hat, Kevin. The hat is not a data center.
The analysts say the legacy businesses must keep growing. Translated: the old cash cows must produce more milk so the new cash cow can be built. The new cow does not exist yet. It is a drawing of a cow. It costs billions per square inch.
Here is my technical analysis. The chart goes up. Then it goes down. Then someone on television says "digestion phase." I have drawn lines on this for twenty years. The lines do not care about gigawatts.
Financial news will tell you this is the defining story of the decade. It is a spending story. Companies are spending money. Historians will call it Tuesday.
Keep buying, though. Somewhere a Microsoft Teams notification is paying for a cooling system, and it deserves your loyalty more than your portfolio does.
Photo by Hitesh Choudhary on Unsplash
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