r/valueinvesting
Mag7 stocks will continue to trade sideways and drop until Capex spending calms down
Mag7 stocks will trade sideways or drop as massive and accelerating AI CapEx pressures cash flows and risks shareholder dilution.
- The companies have strong underlying fundamentals and are not going out of business.
- Massive and accelerating AI CapEx spending will pressure cash flows and stock prices.
- High CapEx may force companies to dilute shareholders to raise funds, as Google has already done.
- Current stock prices do not reflect the bottom, with lower levels expected as CapEx ramps up.
I don’t think these companies are going anywhere but be warned with these recent dips. I personally don’t think this is the bottom and with CapEx spending to reportedly ramp up, I think we will see lower levels through the year with these upcoming earnings. Google has already resorted to diluting shareholders to raise additional funds, and you can argue that they’ve been the cleanest in terms of where the money is going ..
Who’s to say META, Microsoft, and Amzn aren’t to follow ?
Big Tech AI CapEx 2026
Amazon leads the pack at \~$200B, followed closely by Microsoft at $190B (roughly $25B of which is attributed to higher memory/component costs). Alphabet (Google) comes in at $180–190B, after raising guidance by $5B post-Q1 earnings. Meta rounds it out at $115–135B, the smallest in absolute terms but the steepest proportional jump — up \~81% from $69B in 2025.
Combined, the four hyperscalers are on track to spend roughly $725B in 2026, up 77% from last year’s already-record $410B. Goldman projects the number crosses $1T by 2027.
If AI companies fail then all semis, chips, memory, power and network will disappear immediately.
Fail ? They'll cut capex and return to massive profits. Nvda and semis will be annihilated.
Big if, the whole world today depends on those companies. And they show no sign of slowing down. Yes, they are spending on the AI race. But it's not like they are acquiring debt to pay the capex.
I think people are scared now and that's a good time to buy.
They are raising debt through bonds actually
Once the capex starts showing excellent returns, they will grow enormously in my opinion.
If*
Right now they all look like FOMO investors, buying hardware for high prices and no returns.... Except for unrealized gains on AI company stock they cannot sell...
It’s ok. Micron and Sandisk will soon start buying stakes in the mag7 with their massive cash flow so the mag7 can use that same money to buy more memory and SSDs.
The AI circle jerk continues and has become its own ecosystem.
MU earnings prove just that investments in AI infrastructure are enormous, it doesn't say anything about ROI and profitability.
Thank goodness we have a redditor who understands the business of Microsoft, Google, Amazon more than their leadership.
Apple has put there prices up dramatically, they've been hurt significantly by this AI race like all consumer electronics companies
Um, no. Google, Amazon, Apple, Microsoft are still much more than AI. The “shovel” companies are much riskier
That would be true if they were sideways and not 2% down every day
Well meta isnt primarily selling based on tokens, its using ai to help its ad business and succeeding.
All the hyperscalers see the writing on the wall. They need to spend and build. Either dilute shares or take on debt. This is particularly bad this month with inflation ticking up, new fed chair that is perceived as hawkish and markets believing rate hikes are likely.
Oil prices going down will change this.