No free cash flow ?

One of the key questions around the AI boom is no longer whether revenues are growing, but how much cash is left after the investment cycle.

This chart shows the projected next 12-month free cash flow of the major hyperscalers — Amazon, Microsoft, Google, Meta and Oracle. After years of strong growth, free cash flow is expected to fall sharply as AI-related capital expenditure continues to rise.

The market is still rewarding these companies for their strategic position in AI infrastructure. That may be justified over the long term. But it also means that expectations are high at a moment when cash generation is coming under pressure.

At ECP, we like companies that invest for the future. But we also remain attentive to the price paid, the level of expectations and the cash ultimately generated for shareholders.