GREED & fear: AI fatigue and rotation

研报英文原文证据摘录

GREED & fear: AI fatigue and rotation

This is why the next quarterly earnings announcements for the hyperscalers due to commence on 22 July will

provide the next stress test for the AI story in general. Somewhat bizarrely to GREED & fear, the first quarter

earnings announcements in late April provided a bullish catalyst for the AI trade even though the hyperscalers

increased their projected capex to a massive 92% of their projected operating cash flow (see Exhibit 5).

Exhibit 5: Four major hyperscalers' capex as % of operating cash flow

40 (%) Four major US hyperscalers' capex/revenue (%) 100

capex/operating cash flow (RHS) 35 90

30 80

25 70

20 60

15 50

10 40

5 30

0 20

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026E

Note: Capex forecasts for 2026 are based on the midpoint of the latest company guidance for Amazon, Alphabet, Meta and Microsoft,

excluding finance leases. Consensus forecasts for 2026 operating cash flow. Source: Bloomberg, Companies, Jefferies

Still it is also the case that Alphabet, Microsoft and Amazon, though not Meta, are perceived by investors as

direct beneficiaries of AI capex spending via their cloud computing divisions. This is why investors only

registered concerns about Meta’s increased capex spending when the first quarter earnings were announced

in late April. In terms of the individual companies, Microsoft expects to spend US$190bn in capex (including

finance leases) this year. Alphabet and Meta raised their 2026 capex guidance to US$180-190bn and US$125-

145bn respectively. While Amazon maintained its guidance at US$200bn. Still Meta is now reportedly planning

to build its own cloud business to sell excess AI capacity (see Bloomberg article: “Meta Is Planning a Cloud

Business to Sell AI Computing Power”, 1 July 2026).