Big Tech AI Capex Hits $202B as Amazon Cash Flow Turns Negative

Key Takeaways

1. Amazon, Google, Microsoft and Meta posted $202B in combined Q3 capex, up 108% year over year, while Amazon's free cash flow fell to negative $33.5B.
2. Amazon's Q3 revenue rose 12% to $202B, but net income slipped 2% to $21B, shaped by a $9.5B Anthropic-related gain.
3. Damodaran says his Anthropic IPO valuation has drawn challenges and is using them to stress-test his weakest assumptions; Raoul Pal argues crypto is in a mid-cycle pullback, not a cycle top.
4. Data-center project cancellations in Q3 nearly exceeded the prior two years combined, even as manufacturing job openings rose to 584K.
5. Uber's Q3 bookings reached $59.8B with $10.4B trailing free cash flow; Jason sees Uber and Tesla as roughly 50% undervalued.
6. US goods deficit widened 9% over the last 21 months despite tariffs, and Australia and Sweden both raised rates 25 basis points.

1. AI Infrastructure Spending and Its Balance-Sheet Cost

1. Amazon, Google, Microsoft and Meta spent a combined $202B on capex in Q3, up 108% year over year and 446% versus three years ago, which Charlie Bilello frames as an accelerating AI infrastructure arms race 1 2. At Amazon, Q3 revenue grew 12% to a record $202B for the period, while net income fell 2% to $21B, a figure Bilello attributes mainly to a $9.5B "other income" gain from Anthropic in Q3 2025; operating margin rose to a record 14% from 11% a year earlier 3. Free cash flow was negative $33.5B, the largest decline on record, driven by AI infrastructure capex, with property and equipment spending up 122% to $76B 4.
2. Bilello's revenue comparison shows Amazon at an estimated $829B in 2026 versus $717B in 2025 and $638B in 2024, a 24% annualized gain over 20 years, and Amazon's revenue has now overtaken Walmart's after Walmart was 68x larger 25 years ago and 4x larger a decade ago 1 2 3 4. He also lists Q3 revenue growth of +1127% for Anthropic, +161% for SpaceX, +96% for Palantir, +45% for AMD, +26% for Meta, +25% for Google, +19% for Microsoft, +13% for the S&P 500, +12% for Amazon, Netflix and Apple, and 0% for Tesla 5 6. The four largest US tech companies' trailing-12-month revenue reached a record $2.1T — Amazon $797B, Apple $479B, Google $471B, Microsoft $346B — a scale Bilello says exceeds the GDP of all but 13 countries 7.
3. Liz Ann Sonders cites data showing Q3 data-center project cancellations nearly exceeded the 2025 and 2024 totals combined, which she uses to argue that forward-looking concerns about data centers are already showing up in reality 1. She notes manufacturing job openings rose 54K to 584K, the highest since December 2023, possibly driven by AI infrastructure and data-center demand, while education and health services, professional and business services, and government accounted for the most September openings 2 3. The job-openings-to-unemployed ratio rose to 1.06, well below the 2022 peak of 2.0 but in her view consistent with a relatively stable labor market 4.

2. Valuation Debates Around Anthropic and Crypto

1. Aswath Damodaran says his Anthropic IPO valuation has been questioned and is using those challenges to map out the largest and most fragile assumptions in his narrative and where the analysis could go wrong 1. Raoul Pal argues the crypto market is not at a cycle end but in a "mid-cycle pullback," a stretched version of 2020, because the prior rally never reached more than one standard deviation above trend and liquidity never entered a true downcycle, only flattened for a period 2. He says adoption narratives — stable coins, tokenization, AI agents — are already clear and what is missing is fuel, with liquidity as the gasoline, and he argues high rates are not a bearish factor this time 3.
2. Pal also discusses AI's deflationary impact on wages, advisory work and the value of money, and says bitcoin is oversold relative to the Nasdaq; he says he rebuilt his entire business with AI without writing a line of code and stresses that accountability and identity layers for AI agents are commonly overlooked 1. Separately, he announced that his new book "The Everything Code" is on sale and asked readers who receive it to leave an Amazon review, saying reviews strongly affect a book's reach 2 3.

3. Markets, Rates and the Economy

1. Bilello pushes back on the "sell in May" strategy, noting the May-to-October average return was still positive at an annualized +7%, with stocks up 73% of the time 1 2. He says tariffs were promoted as a fix for the US trade deficit, but the goods deficit was $2.19T over the last 21 months versus $2.01T in the prior 21 months, widening 9% rather than shrinking 3. On global central banks, Australia raised rates 25 basis points to 4.85%, its fifth hike this year, and Sweden raised 25 basis points to 2.00%, its first hike since 2023 4 5.
2. Sonders reports ADP private employment rose 86K in October, above the 67K expected and matching the prior 86K, the strongest consecutive gain since June, led by trade, transportation and utilities while professional and business services weakened 1 2. ISM services PMI fell to 54.5 from 54.9, with new orders at 55.9 from 59.8, employment at 51.4 from 50.1, and prices paid at 73.0 from 74.0; light vehicle sales fell for a second month to 15.54M from 15.98M 3 4. Ben Carlson lists US home-price annual returns of +11% in 2020, +19% in 2021, +6% in 2022, +6% in 2023, +4% in 2024, +1% in 2025 and +1% in 2026, and asks whether housing will lag inflation for the rest of the decade and whether real estate is now a poor investment 5.

4. Company and Deal News

1. Jason reviews Uber's 2026 Q3: gross bookings of $59.8B, a fifth straight quarter of more than 20% growth, non-GAAP EPS up 35% year over year to $0.88, and trailing free cash flow of a record $10.4B; he expects roughly 700 fully driverless vehicles in 2026, more than 2,000 in 2027 and tens of thousands from 2028 1. He names Uber and Tesla as his current top picks, calling both roughly 50% undervalued with models projecting a threefold gain in five years, and lists Netflix, Amazon, Google, Meta, Robinhood, Nvidia, Microsoft, Apple and Shopify among core holdings with expected 10-year returns of two to three times the index or more 2. Reid Hoffman congratulated Burkay Gur, Gorkem and their team on Fal AI's milestone financing, saying it has already had a large impact on generative media and that the best is yet to come 3. ICON announced a Series D round of more than $200M, which Jason shared while saying its motivations deserve another mention 4.

5. AI, Work and the Election

1. Carlson's "Animal Spirits" episode 489, "Drowning Financially," covers sharp declines in well-known stocks, rising bearish sentiment against a resilient market, the buy-the-dip generation, the advantage of index investing amid the AI boom, Anthropic's rapid growth, AI's effect on jobs, the cost of a middle-class life in New York and the biggest risks to retirement savings 1. A separate episode list includes financial drowning, index funds versus picking AI stocks, the bear case, why stocks have not fallen more, New York middle-class life, Michael's midlife crisis and the benefits of gratitude 2.
2. On the election, Bilello cites Polymarket showing an 87% probability that Democrats win both chambers, which he calls the highest so far, and later posts "it's over," listing inflation among the issues 1 2. Clifford Asness says the result is mostly deserved by Republicans and Trump rather than earned by Democrats, and asks whether those who claimed democracy had ended and America was fascist will retract that 3. Jason argues Trump will lead the GOP to defeat over ICE, war, tariffs, another war and inflation, and says he did not expect Texas to flip blue; he adds that a blue wave also reflected tariff chaos, perceptions of corruption and lost Hispanic votes over ICE violence, and that divided government could force both parties to cooperate on ending wars, fixing inflation and addressing housing, health care and education 4 5 6. Hoffman says voters clearly asked for a different kind of country, one that can compete economically and deliver at home, with leaders who are trustworthy and fight for them 7.

6. Disputed and Unverified Items

1. disputed/unverified: Jason criticizes a podcast sponsor over a host's call to execute Elon Musk, saying he will stop using the sponsor's products and buy from its two biggest competitors instead, and describing the remark as a murder suggestion made over a difference of opinion; he also says the host previously joked about an assassination attempt on Trump 1 2. He shared content alleging Scott Galloway called for Musk's execution at a Kara Swisher event on grounds of being a "traitor to the West," and said he regrets spending money and time on him 3 4 5. Meb Faber mocked Galloway's remark, saying he seemed to be experiencing a severe cannabis-related psychotic episode 6. These are the posters' characterizations of statements by third parties and have not been independently verified in the supplied material.