Frank

A year ago, Microsoft, Alphabet and Meta generated $60.7 billion of free cash flow in a single quarter. This summer, $7.4 billion. They didn't sell less. Revenue grew 19% at Microsoft, 25% at Alphabet and 26% at Meta. What changed is the bill: $125.6 billion in three months for data centers, chips and servers, double what they spent a year earlier. Meta put 54 cents of every dollar of revenue into capex. Alphabet spent $9 billion more than it took in, its second negative quarter in a row, and this morning its stock fell 12%. If it closes down more than 9.77%, it will be its worst day after earnings since going public in 2004. The detail that worries me most is in Google's search numbers. Search ads grew 12% and still missed expectations. Philipp Schindler, Alphabet's chief business officer, said part of the reason is that AI Mode makes less money per search. So Google is spending record sums to build a product that earns less than the one it replaces. For twenty years these were the best businesses ever invented. You wrote the code once, sold it to billions of people, and almost every new dollar of revenue fell to the bottom line. AI doesn't work like that. Every answer runs on a chip someone had to buy and on electricity someone has to pay for. Big Tech is turning into something closer to a utility: huge upfront costs, long paybacks, and profits that depend on keeping the machines full. That can still be a great business. But it is a different business, and investors are only starting to price it that way. The old moat was code. The new one is cash.