July 2026 · Interim Note
I Went and Checked the AI Capex Number
Two days ago I wrote that Thursday’s selloff was really one question wearing four different headlines: is AI infrastructure spending still self-funding, or is the market starting to price in that it isn’t? I said the question wasn’t going away just because the tape recovered. I didn’t actually answer it — I just flagged it. This note is me going back and doing that.
The actual number, from the actual filings
I pulled Alphabet's and Meta's own Q1 2026 SEC 8-K exhibits — not commentary about the filings, the filings themselves — and built a full study around one simple ratio: how much free cash flow did each company generate for every dollar of that quarter's capex. Alphabet: $0.28. Meta: $0.65. Both are still capex-negative on a pure cash basis this quarter, meaning neither is currently self-funding its AI build-out purely from operating cash flow — they're covering the gap with existing cash balances and debt capacity, which both companies have plenty of.
That's a real number attached to a question I'd previously only asked in the abstract. It doesn't resolve the question. It just means I'm not guessing at the size of the gap anymore.
What this does and doesn't change
It doesn't change my GOOGL or META positions today — the Blackout Rule applies to a bad headline, and a measured, sourced number isn't a headline, it's homework. What it does change is what I'm actually watching going forward: not "is AI capex still a story," but a specific, trackable ratio for two specific companies I own. The full study lays out exactly what would make me take the bear case more seriously — two more consecutive quarters of compression without matching revenue acceleration — and I'd rather have that written down now, before it happens, than reconstruct my reasoning under pressure later.