In a X post, Black said that he’s bullish on big technology names despite the market concern over massive capital expenditures planned for 2026, outlining three major reasons for his stance.
- The growth investor said that capex budgets usually start high at the beginning of the year, and then shrink as companies decide they do not need the whole investment.
- Black added that capex gets amortized over five years, and hence, does not weigh down on the bottom line all at once.
- For his third point, Black said tech CEOs would eventually see that the capex would not pay off, and they would scale back future capex plans.
The Future Fund managing partner, Gary Black, said on Friday that he’s bullish on big technology names despite the market concern over massive capital expenditures planned for 2026.
In an X post, Black said, “I see a buying opportunity in big tech names that have been hammered because of outsized 2026 capex forecasts.”
The fund manager’s comments come as the largest tech companies have collectively announced plans to invest over $630 billion in AI buildouts in 2026, more than double the spend from 2025.
Black’s Rationale
Black outlined three major reasons for his stance in the post.
First, the growth investor said that capex budgets start high at the beginning of the year, and then shrink over the course of the following months as companies decide they do not need the whole investment.
Second, Black said capex usually gets amortized over five years, unlike normal operating costs. As a result, the expenditure does not weigh down on the bottom line of the companies all at once.
“Most of the companies shown packaged their FY’26 capex forecasts with FY’26 profit forecasts so investors could see the current year impact on profits,” Black said.
For his third point, Black said eventually tech CEOs would see that the capex splurge would not pay off as the return on investment would fall short over everyone’s bet on the same play.
“There will be an awakening by tech CEOs that much of this capex splurge won’t pay off — i.e., ROI will fall short of the cost of capital — as everyone is betting on the same AI payoff, and not everyone will win,” he said.
“Once this realization occurs future capex plans will be scaled back,” Black added.
Black also said that Google parent Alphabet Inc. (GOOG, GOOGL) and Meta Platforms Inc. (META) both looked compelling at their current price-to-earnings ratio.
“$GOOG at a 2026 P/E of 28x vs 20% long-term eps growth (1.4x PEG) and $META at a 2026 P/E of 22x vs +18% EPS growth (1.2x PEG) both look compelling here,” he said.
AI Capex Spending
In its latest earnings, Amazon.com (AMZN) said it will allocate $200 billion to capital expenditure in 2026. Meanwhile, Alphabet guided its capex for 2026 between $175 billion and $185 billion, well above street expectations of $120 billion.
Meta increased its capex for 2026, quoting a range of $115 billion to $135 billion, up considerably from $72.22 billion spent in 2025.
While the larger market has expressed concerns over the massive expenditure, CEO of Nvidia Corp. (NVDA) Jensen Huang said earlier on Friday that these investments are “appropriate and sustainable.”
In a CNBC interview, he noted that the demand for AI is now skyrocketing during a “once-in-a-generation infrastructure buildout,” adding that the companies are going to see a positive impact to their cash flows.
Market Reaction
Shares of GOOG closed down almost 2.5% on Friday, and have gained over 67% in the past year. Meanwhile, shares of META were down 1.31% at market close, and have lost 7.1% in the past year.
MSFT shares closed up 1.9% on Friday, after having lost over 3.5% in the past year. AMZN shares were down 5.55% at the end of the day, and have lost nearly 12% in the past year.
Meanwhile, a broader rally in semiconductor stocks after Huang’s comments sent U.S. markets higher on Friday. The Dow Jones Industrial Average (DJIA) closed over 50,000 in a record high. Meanwhile, the tech-heavy Nasdaq-100 (NDX) closed up 2.15%.
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