Companies are spending roughly $1 trillion annually on data centers, GPUs, and computing infrastructure. The equipment is expected to become obsolete in about five or six years, unlike long-lived infrastructure such as highways. Hyperscalers report large capex increases, including Microsoft, Alphabet, Amazon, and Meta, with spending trends that add up toward roughly $500 billion from these firms alone, before including other providers. Chip and networking vendors capture much of the spend, with NVIDIA reporting rapid data center networking growth and very large revenue gains. Micron’s gains are tied to HBM demand for GPUs rather than a broader memory cycle. The focus is on whether the scale and speed of investment represent misallocated capital and liquidity strain.
"Companies are spending roughly $1 trillion annually on data centers, GPUs, and computing infrastructure, and the gear they are buying, in his words, "is going to be obsolete 5 or 6 years, maybe, maybe quicker." Highways last fifty years. H100s do not."
"Microsoft reported $30.88 billion in capex for its March quarter, up 84.39% year over year. Alphabet spent $35.67 billion, more than double the prior year. Amazon put up $44.20 billion in a single quarter, an annualized pace near $175 billion, with trailing free cash flow collapsing to $1.2 billion. Meta raised its 2026 capex guide to $125 to $145 billion, an upward revision mid-year."
"NVIDIA is the obvious cash register. Q1 FY27 revenue hit $81.62 billion, up 85.23%, with data center networking alone growing 199%. Jensen Huang calls it "the largest infrastructure expansion in human history." The market prices NVIDIA at a $5.16 trillion market cap. Micron just crossed $1 trillion after UBS lifted its price target from $535 to $1,625."
"Schiff's argument goes past the bubble label. Plenty of strategists agree valuations are stretched. Vanguard's 2026"
Read at 24/7 Wall St.
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