AI megacycle: Tech firms prioritize investments over shareholder payouts
Big names like Alphabet, Amazon, and NVIDIA are ramping up their spending on new tech as AI enters what HSBC calls a "megacycle."
Instead of focusing on shareholder payouts, these companies are putting more of their cash into building out AI tools and infrastructure, basically betting big that practical uses for AI are about to take off.
Predictions for tech revenue growth and investment focus
HSBC expects tech company revenues to jump from $2.3 trillion in 2025 to $2.8 trillion by 2026.
With 61% of cash flow now going toward new investments (and less toward buybacks or dividends), it's clear where their priorities lie.
NVIDIA and Microsoft stand out for being especially well-prepared.
HSBC is bullish on Alphabet and NVIDIA with "Buy" ratings, but sees Apple's growth as more modest, giving it a "Hold."