Big Tech's Capex Is Half of Wall Street's Profit Growth
Summary
The piece analyzes Goldman Sachs' forecast of $1.2 trillion in hyperscaler capex and argues that AI-related spending is a major driver of S&P 500 earnings growth this year. It explains the accounting timing differences between capex as assets for buyers and revenue recognition for sellers, and discusses depreciation, unrealized gains, and semiconductor margins, suggesting AI investment's earnings boost may fade even as spend rises. The analysis also highlights the breakeven and profitability hurdles for AI investments and implications for budgeting and vendor profits.