Did Big Tech Just Fail the Capex Test, or Pass It?
Alphabet reported cloud revenue up 82% year on year. That is not a good number; that is a spectacular number, well past what the street was looking for. The stock dropped more than 7% the same day. Worst day in over a year. I have been sitting with that for two weeks, and I think it is the most important thing that happened in the markets this quarter, more than any of the beats that came after it. The number nobody was looking at Here is what investors actually reacted to. Alphabet raised its 2026 capital expenditure guidance to as much as $205 billion and posted its first negative free cash flow quarter since it went public in 2004. Twenty-two years of positive free cash flow, gone, and the reason was AI infrastructure. Meta reported a week later. Revenue up 28% to $60.8 billion. Fine. Good, even. But free cash flow fell from $8.5 billion to $784 million because $31.1 billion of capex ate almost all of the $31.9 billion the business generated in operating cash. Shares fell as muc...