Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

<ul>
<li>In aggregate, the 4 hyperscalers reported excellent results. Revenue growth is accelerating. Cloud growth is accelerating. Margins are increasing. Which in turns translates into higher Capex.</li>
<li>Capex growth (65% in 2025 and ~100% in 2026) will remain way above revenue growth (15% and ~20%) and operating profit growth (17% and ~25%). </li>
<li>Consensus remains desperately too low on growth, margins, capex. Consensus will revise up. This doesn’t remove the concern above, but can support share price momentum.</li>
</ul>


In aggregate, the 4 hyperscalers reported excellent results. Revenue growth is accelerating. Cloud growth is accelerating. Margins are increasing. Which in turns translates into higher Capex.
Capex growth (65% in 2025 and ~100% in 2026) will remain way above revenue growth (15% and ~20%) and operating profit growth (17% and ~25%). 
Consensus remains desperately too low on growth, margins, capex. Consensus will revise up. This doesn’t remove the concern above, but can support share price momentum.


Hyperscalers: Excellent 1Q26! Higher Revenue Growth, Margins Expansion Supporting Higher Capex

Global Equities, Multi-Asset PM, Dantes Outlook

Damanick Dantes, CMT

Global Equities, Multi-Asset PM

Dantes Outlook

We invest over a full market cycle, using multi-asset portfolios tailored to each global client, from individuals to family offices.

Built to Endure

Cross Asset Strategy

<ul>
<li>Global equities and commodities contributed to gains throughout our portfolio suite, driven by positive selection effects.</li>
<li>Aggressive strategies continue to outperform their respective benchmarks YTD, especially as tech and crypto stabilize.</li>
<li>Positioning carries over into September, maintaining an underweight to bonds and overweights to global stocks and commodities.</li>
</ul>


Global equities and commodities contributed to gains throughout our portfolio suite, driven by positive selection effects.
Aggressive strategies continue to outperform their respective benchmarks YTD, especially as tech and crypto stabilize.
Positioning carries over into September, maintaining an underweight to bonds and overweights to global stocks and commodities.


Portfolio Update: Selective in Global Stocks, Commodities, Underweight Bonds

<ul>
<li>This report looks at SaaS-Software versus Hyperscalers. Which group is getting cheapest and is attractive? Is the steep Software correction justified by SaaSpocalypse? I add FinTech and eComm. </li>
<li>The overall market’s direction says that it’s not time to buy anything. However, we still can think about the merits, risk/reward, valuations/growth of different sectors. </li>
<li>Conclusions 1) SaaS-Software has derated to a level consistent with earnings growth 2) Hyperscalers tend to outperform with lower volatility 3) a couple of FinTechs are interesting.</li>
</ul>


This report looks at SaaS-Software versus Hyperscalers. Which group is getting cheapest and is attractive? Is the steep Software correction justified by SaaSpocalypse? I add FinTech and eComm. 
The overall market’s direction says that it’s not time to buy anything. However, we still can think about the merits, risk/reward, valuations/growth of different sectors. 
Conclusions 1) SaaS-Software has derated to a level consistent with earnings growth 2) Hyperscalers tend to outperform with lower volatility 3) a couple of FinTechs are interesting.


Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

<ul>
<li>Reviewing Consensus forecasts 2026-28, ie the impact of AI capex. Large operating margins expansion, even higher increase in cash flow from operations. Increasing depreciations but ~17% net income Cagr.</li>
<li>The debate is capex. Is capex growth slowing down after 2026, is 2026 the peak capex/revenue? My view is that capex growth will slowdown a lot less than Consensus expects.</li>
<li>The conundrum is: how to value stocks with high earnings growth (17%) but increasing fixed costs and slim free cash flow?</li>
</ul>


Reviewing Consensus forecasts 2026-28, ie the impact of AI capex. Large operating margins expansion, even higher increase in cash flow from operations. Increasing depreciations but ~17% net income Cagr.
The debate is capex. Is capex growth slowing down after 2026, is 2026 the peak capex/revenue? My view is that capex growth will slowdown a lot less than Consensus expects.
The conundrum is: how to value stocks with high earnings growth (17%) but increasing fixed costs and slim free cash flow?


Hyperscalers: What Is Consensus Forecasting? Good or Bad? How Much Capex Can They Spend?

AI | Semiconductors | Commodities, Mint Finance

Raghav Vashisht

AI | Semiconductors | Commodities

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Thematic (Sector/Industry)

<ul>
<li>
Compute Is Perishable Inventory: racks earn nothing merely plugged in, and unallocated GPU hours expire immediately. Hyperscaler returns hinge on billable utilisation before chip obsolescence erodes installed fleets' residual values.</li>
<li>
Accounting Masks Capital Exposure: disclosed off-balance-sheet commitments exceed $3.1 trillion. Useful-life extensions and lease reclassifications reduce reported headline capex without lowering actual cash outlays, obscuring true infrastructure intensity.</li>
<li>
Quality of Demand Is Shifting: Multi-year RPO backlogs offer duration visibility, not locked-in returns. With compute futures launching, spot-to-contract spreads and post-trial enterprise conversion will reveal true marginal capacity yield.</li>
</ul>



Compute Is Perishable Inventory: racks earn nothing merely plugged in, and unallocated GPU hours expire immediately. Hyperscaler returns hinge on billable utilisation before chip obsolescence erodes installed fleets' residual values.

Accounting Masks Capital Exposure: disclosed off-balance-sheet commitments exceed $3.1 trillion. Useful-life extensions and lease reclassifications reduce reported headline capex without lowering actual cash outlays, obscuring true infrastructure intensity.

Quality of Demand Is Shifting: Multi-year RPO backlogs offer duration visibility, not locked-in returns. With compute futures launching, spot-to-contract spreads and post-trial enterprise conversion will reveal true marginal capacity yield.


The Perishable Rack: AI Capex as an Inventory Cycle

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOG US)

Hyperscalers: Excellent 1Q26! Higher Revenue Growth, Margins Expansion Supporting Higher Capex

Hyperscalers are seeing accelerating revenue and cloud growth, leading to higher margins and Capex, with consensus likely to revise up.

Nicolas Baratte

Portfolio Update: Selective in Global Stocks, Commodities, Underweight Bonds

Breakdown of our global multi-asset portfolios with performance and positioning. We're overweight stocks and commodities and underweight bonds,...

Damanick Dantes, CMT

Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

Nicolas Baratte

Hyperscalers: What Is Consensus Forecasting? Good or Bad? How Much Capex Can They Spend?

Analysis of Consensus forecasts for 2026-28 (AI capex impact): large operating margin expansion, higher cash flow, debate on slowing capex growth...

Nicolas Baratte

The Perishable Rack: AI Capex as an Inventory Cycle

We dissect how the hyperscaler build-out is an inventory cycle and not real estate. Why $725B in capex, $3.1T in off-balance commitments, and RPO...

Mint Finance

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hyperscalers: Excellent 1Q26! Higher Revenue Growth, Margins Expansion Supporting Higher Capex

​Hyperscalers are seeing accelerating revenue and cloud growth, leading to higher margins and Capex, with consensus likely to revise up.

Nicolas Baratte

Portfolio Update: Selective in Global Stocks, Commodities, Underweight Bonds

Breakdown of our global multi-asset portfolios with performance and positioning. We're overweight stocks and commodities and underweight bonds,...

Damanick Dantes, CMT

Is Software Getting Cheap? De-Rating, but Not Cheap. Hyperscalers and Some Fintech More Interesting.

​Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

Nicolas Baratte

Hyperscalers: What Is Consensus Forecasting? Good or Bad? How Much Capex Can They Spend?

​Analysis of Consensus forecasts for 2026-28 (AI capex impact): large operating margin expansion, higher cash flow, debate on slowing capex growth...

Nicolas Baratte

The Perishable Rack: AI Capex as an Inventory Cycle

We dissect how the hyperscaler build-out is an inventory cycle and not real estate. Why $725B in capex, $3.1T in off-balance commitments, and RPO...

Mint Finance

Hyperscalers are seeing accelerating revenue and cloud growth, leading to higher margins and Capex, with consensus likely to revise up.

Analysis of SaaS-Software vs. Hyperscalers: SaaS-Software has corrected to earnings growth levels, Hyperscalers outperform with lower volatility,...

Analysis of Consensus forecasts for 2026-28 (AI capex impact): large operating margin expansion, higher cash flow, debate on slowing capex growth...