So I was looking at the 2026 capex projections. The spending is nuts but honestly the debt side is what stands out. Big guys like AMZN, MSFT and ORCL are taking on massive leverage to build this infra out. ORCL especially is just crazy leveraged compared to their equity right now.
The thing that bugs me is institutional rules. Huge funds have strict debt to asset limits they have to maintain. If the macro gets weird or tech pulls back, couldnt these heavy debt names trigger forced selloffs from funds trying to stay compliant?
Then look at hardware. NVDA, ANET, ASML. Its basically all pure cash. Zero long term debt to worry about.
Just curious if anyone else is moving away from the leveraged cloud giants and sticking with hardware just for the safety of their balance sheets. Or maybe Im overthinking it.
(disclaimer: long some hardware, zero ORCL. also I wrote about this recently for TalkMarkets since I contribute there, but absolutely not linking it here. just wanna hear your thoughts)
AI capex is insane but the debt is what actually scares me
byu/itsarmansheikh instocks
Posted by itsarmansheikh
2 Comments
You have to spend money to make money.
Netflix spend probably over 100 billion by now to build their library of content.
Could the return be nothing? Sure look at Meta and their failed VR attempt.
But I’d rather them try to keep innovating and spending than just do nothing and be complacent imo.
Meh. Mega tech is mostly funding capex with cash reserves and cash flow. Not worried at all.