One to watch

This is one chart by Dhaval Joshi every investor in US tech should keep on the desk as we enter Q4 2026. AI capex has gone almost vertical, led largely by the hyperscalers. That spending boom is feeding demand and pricing power across the technology supply chain and has helped push US tech profit margins to exceptional levels. In a market where a large part of EPS growth is concentrated in tech, this matters. But capex is not the same as return on capital. The investment is visible today; the future cash flows needed to justify it are still to be proven. If AI capex growth slows, or supply catches up with demand, pricing power and margins could normalize quickly. And with them, an important engine of US earnings growth. The key question going into 2027 is therefore not whether AI is transformative. It is whether the returns on today’s extraordinary investment will justify the amount of capital being deployed. Watch capex. Watch pricing power. Watch cash flows.