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Tech is starting to look more like utilities and telecom: infra-heavy and capital-intensive
If AI darlings used to trade on EBITDA, today they should trade on EBITDA – capex
Hyperscalers are now spending 20–30% of revenue on capex (vs <5% pre-AI boom) on par with utilities and approaching what AT&T spent at the peak of the telecom bubble...(this time is different!)
Watch depreciation closely - that’s where a lot of the accounting magic happens
The returns on chips and data-center buildout won’t look like the returns from software. Hardware depreciates fast; software has near-zero marginal cost and a much longer shelf life
Thank you for your attention to this matter!
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