The high-tech market is undergoing a historic shift. Four leading chipmakers — Nvidia (NVDA), Micron (MU), Broadcom (AVGO), and Applied Materials (AMAT) — are collectively set to generate a record $430 billion in free cash flow over the next 12 months. This figure is more than triple the results from just two years ago and clearly demonstrates who the primary beneficiary of the artificial intelligence boom is.
Decade's Contrast: 'Cash Machines' vs. 'Capital Burners'
However, on the flip side lies a troubling picture for the five largest AI companies: Amazon (AMZN), Alphabet (GOOGL), Meta (recognized as an extremist organization in Russia), Microsoft (MSFT), and Oracle (ORCL). My data analysis shows that their combined free cash flow will turn negative for the first time in history. As recently as 2024, at their peak, these giants reported a total figure of over $260 billion.
The reason for this reversal is the explosive growth in capital expenditures on AI infrastructure. According to my estimates, the combined AI-related spending of these five companies will rise to $1.8 trillion in 2026–2027. In essence, chipmakers are turning into 'cash machines,' while AI giants are burning record amounts of capital to sustain the computing arms race.
Cycle Sustainability in Question
This statistic raises a fundamental question about the viability of the current investment model. Economist Remy Bourgeau rightly questioned its sustainability: what will happen to chip manufacturers when AI giants stop pouring all this cash flow into them? Sooner or later, tech giants will have to start making money again, not just spending it.
The Chinese factor also deserves special attention. Chinese giants continue to sell their models worldwide at a fraction of U.S. prices, while simultaneously purchasing Chinese chips — exactly what the Donald Trump administration aimed to achieve. In my view, this is the essence of the current investment cycle: the ongoing capital inflow from AI giants to chipmakers cannot be considered infinite.
Analytical Conclusion: The market is on the verge of a correction. While Nvidia and its 'colleagues' bask in record profits, investors should closely monitor when giants like Microsoft and Amazon begin to curb their capital appetites. Once that moment arrives, the 'cash machines' could face a serious reassessment of valuations.