Subsea Cables & Internet Infrastructure

Free cash flow equals operating cash flow minus capital expenditures. If capex exceeds economic or real depreciation, then that cash could be returned to the owners via dividend or stock buybacks without sacrificing or reducing the company's ability to generate future profits and cash flow. It is a sustainable payout to the owners. Negative free cash flow increases wealth if marginal capex returns are high enough relative to the risk hurdle. Amazon is still quite profitable today, but investors are concerned future returns are inadequate to justify current negative free cash flow. After all, current wealth is being sacrificed in pursuit of future wealth that may be an illusion. The crux of investor angst is that end user AI revenues are tiny relative to investments. Goldman Sachs forecasts global AI capex to reach $1 trillion in 2026 and $3 trillion in 2030. Gartner, the consulting firm estimates $64 billion in 2026 AI end user revenues. The gap between return as measured by end us...

AI data centers are extremely capital intensive. Indeed, much more than a standard data center due to the power infrastructure, bare metal servers, and GPUs. But whereas most capital intensive industries have low operating expenses, the AI data center has very high operating expenses as many facilities require hundreds of megawatts or in some cases gigawatts of electricity. So this leads to a high capex, high debt business model combined with high operating expenses. Not to mention, low customer switching costs since AI service providers generally just download their data and models into these bare metal servers and estimate them. Hence, the balance of power generally favors the customer, AI service provider, as opposed to the standard data center model where customers incur very high exit costs. The result are contracts with no penalty termination clauses and 60 to 90 days cancellation notice requirements. In Oracle's case all of its free cash flaw has evaporated due to the immens...

 META Loses $310 Billion In Stock Value In March: The AI Meltdown Begins In March alone META's market cap fell $310 billion driven by poor financial performance. The key metric is free cash flow, which equals cash profits minus capital expenditures. In the end free cash flow is what investors want, namely oney they could put in their pockets without impairing company operations. META's free cash flow is expected to be only $8 billion this year down from a 2025 figure of $46 billion. The company's massive AI investments are not yielding much revenue and hence are driving free cash flow to zero.  Unfortunately, the emerging AI crash will affect our industry. I anticipate the very expensive Waterworth project could be cancelled as well as other projects. AI is Zuckerberg's second big mistake. The Metaverse was his first. He only remains CEO because he is the majority owner of a special class of voting shares that gives him ten votes per share versus one vote per share for ...