The Chipmakers Are Getting Rich While The AI Giants Bleed Cash

Per The Kobeissi Letter: Nvidia, Micron, Broadcom, and Applied Materials are expected to generate a combined record $430 billion in free cash flow over the next twelve months — more than triple what they generated two years ago. At the same time, the combined free cash flow of Amazon, Alphabet, Meta, Microsoft, and Oracle is projected to turn negative for the first time on record — a reversal from a +$260 billion peak in 2024. This comes as AI-related capex by those five companies is estimated at roughly $1.8 trillion across 2026 and 2027. Source: The Kobeissi Letter

This is the clearest single picture of the framework's Layer 2 claim — that AI capex is outrunning the cash flow meant to justify it. The chip suppliers are the shovel-sellers, and they're minting money. The hyperscalers are the diggers, and for the first time on record, as a group, they're spending more than they take in. A supplier boom and a buyer cash deficit aren't contradictory — they're the same $1.8 trillion of capex seen from opposite ends, recorded as revenue at the supplier before it shows up as strain at the buyer. The question the numbers raise is simple: the chipmakers' record cash flow depends entirely on the buyers continuing to spend beyond their means. That works until the buyers can't, or won't, keep burning cash — and the moment the capex slows, the supplier boom slows with it.