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Feb 14
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SHORT
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chumba
Substack author, The Cookie Chumbles
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"Hyperscaler buybacks are trending to zero as these businesses *must* reinvest their free cashflow into growth capex to maintain competitiveness." This makes them capital-intensive, not "the greatest businesses in the entire world." The core investment thesis for these companies (capital-light, high FCF, massive buybacks) is eroding, leading to lower FCF and potentially lower multiples as they become more like traditional capital-intensive businesses. Take short positions or underweight large-cap technology companies heavily reliant on AI capex to defend their competitive position, as their FCF generation and buyback capacity diminish. AI capex leads to unforeseen productivity gains and new revenue streams; open-source/Chinese models fail to catch up; market continues to value growth over FCF. |
The Cookie Chumbles
Doomer or Boomer
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