The semiconductor market is experiencing a historic divergence: leading chip manufacturers are increasing their free cash flow to record levels, while the largest companies in the artificial intelligence sector are showing a negative aggregate figure for the first time. This is not just statistics — it is a signal of fundamental changes in the structure of the technology sector.
Based on the latest data, I estimate that four key chipmakers — Nvidia (NVDA), Micron (MU), Broadcom (AVGO), and Applied Materials (AMAT) — will generate a combined free cash flow of $430 billion over the next 12 months. This figure is more than three times the result from just two years ago. In fact, these companies are turning into "cash machines," capitalizing on unprecedented demand for computing power.
At the same time, the picture for AI giants is diametrically opposite. The combined free cash flow of Amazon (AMZN), Alphabet (GOOGL), Meta (META), Microsoft (MSFT), and Oracle (ORCL) will turn negative for the first time in history. This is a sharp reversal: as recently as 2024, at their peak, these companies reported a combined figure of over $260 billion.
The Root of the Problem: Explosive AI Capital Expenditures
The reason for this contrast is the explosive growth in capital expenditures on artificial intelligence infrastructure. According to my calculations, the AI-related spending of these five tech giants will total $1.8 trillion in 2026 and 2027. They are burning record amounts of capital to build data centers and purchase equipment, thereby generating record profits for chip manufacturers. It is this contrast that I call the "shocking statistic of the day."
The Question of Cycle Sustainability
The data raises a legitimate question: how sustainable is the current configuration? Sooner or later, the AI giants will have to start making money again, not just spending it. It is worth considering what will happen to chip manufacturers when this cash flow dries up. Chinese giants, selling their models worldwide for a fraction of American prices and purchasing Chinese chips, only add uncertainty to this already complex cycle.
My Expert Commentary: The current dynamic resembles a classic "profit paradox": the suppliers of "shovels" during a gold rush make fortunes while the gold prospectors themselves incur losses. The question is when investors will begin to reassess the risks of AI giants, whose capital expenditures do not yield immediate returns. This could become a trigger for a correction in the sector, and then chipmakers will have to find new growth drivers.