Make money doing the work you believe in
Fascinating to see these two things play out in parallel:
The massive CapEx investments coming in 2026
The collapse of software multiples over the last quarter
It highlights the logic at hand for the hyperscalers: risk of disruption (software growth primarily coming from AI) + immediate reward from providing compute to the AI research labs + no reasonable alternative to investments (~$400B in cash on the balance sheet, $100B in quarterly net income).
The combination of the three leads to the logic of investing as much as possible to capture the AI opportunity. And it’s worth noting, demand for compute still exceeds supply from the hyperscalers.
Wrote up my thoughts on the collapse of software stocks, hyperscaler investments, and what it means for the hyperscalers going forward.
Hope you enjoy!
