CICC estimates that cumulative global AI capital expenditure from 2026 to 2030 could reach 5.6 trillion dollars, but operating cash flow would cover only about 2.1 trillion, leaving a funding gap of 3.5 trillion. As a recent Financial Times piece argued, Nvidia’s largest customers are turning into its enemies: Google and Amazon keep buying large volumes of Nvidia chips while also building their own silicon and compute infrastructure to reduce dependence.
The old rule is breaking
For two years Nvidia became one of the most watched tech names on a simple premise: as long as Microsoft, Google, Amazon and Meta kept buying chips, servers and equipment, the upstream supplier kept benefiting. The market watched how much these buyers pledged to spend, because more spend meant more orders and a clearer growth story. Now the market asks a different question: will that spending eventually return value? Around that question, opinion has split three ways.
The first camp keeps backing Nvidia and its supply chain, reasoning that no matter how the giants compete, compute demand will not vanish and chips, optical modules and servers will keep benefiting. The second turns to the spenders themselves, Google, Microsoft, Amazon and Meta, betting that if they prove the outlays pay off, they are the new opportunity. The third backs no one, convinced the bubble will eventually destroy value and that staying out is the best move.
From capex to cash flow
Since July the markets have whipsawed: the CSI Star 50 index fell about 26 per cent in a month, a record drop; Korea’s KOSPI lost 22 per cent then jumped 18 per cent in a single day; the Philadelphia Semiconductor Index dropped more than 20 per cent in July before a early-August rebound. The pivot showed in two earnings reactions. On 22 July Google beat, with cloud revenue up 82 per cent against a 64 per cent expectation, but a raised capex guide pushed the stock down about 7 per cent. On 30 July Microsoft beat and held its capex guide flat to down, and the stock rose more than 9 per cent. The message is clear: the size of capital spending is no longer a positive catalyst, and attention has moved to free cash flow.
Among the four US cloud giants, Microsoft remains comparatively steady, while Google, Amazon and Meta all show varying cash-flow pressure. Investor Jim Chanos calculates that the incremental return on the big-five cloud spend has roughly halved, from about 40 per cent to 20 per cent in 18 months. The unconditional love affair Wall Street had with AI is, by most reads, over.
Read the original report (Sohu IT)
Translated and adapted from Sohu IT (it.sohu.com).