Key insights
- Analysis reveals declining True Free Cash Flow for Google, Amazon, Meta, and Microsoft due to soaring CapEx, particularly for AI infrastructure. Nvidia is the exception, benefiting as a key supplier. High P/FCF multiples for some suggest overvaluation. Passive investment flows may be artificially inflating valuations despite weakening fundamentals, creating a potential risk for equity markets.
We've all heard the AI capex story. I wanted to see the physical cash reality.
I got tired of net income headlines so I wrote a Python script to pull 16 years of SEC XBRL filings for every stock that's ever been in the S&P 500. I calculated True Free Cash Flow (Operating Cash Flow minus CapEx minus Stock-Based Compensation) for the Magnificent 7 to see who's actually printing cash and who's burning it building data centers.
Here's what the earnings releases aren't showing you:
The ugly:
- Google's True FCF shrank from $47B to $46B while revenue grew 31%. CapEx nearly tripled — $32B to $91B. * Amazon's True FCF went negative in 2025 at -$11.8B. $131B in CapEx will do that. * Meta's True FCF fell 14% while Zuckerberg told everyone the AI bet was paying off. * Microsoft peaked at $63B True FCF in 2024, fell to $59.6B in 2025.
The exception: Nvidia. True FCF went from $2.9B to $56B in two years. They're the toll booth everyone else is paying.
The logical problem: The market is pricing all 6 as winners of an arms race where the math only works if at least one loses. Either CapEx spending ends at some point and they collect tolls like Buffett's bridge — or they keep feeding Nvidia indefinitely. Both sides can't win the bet simultaneously.
The P/True FCF multiples tell the real story. Google is at 86x. META is at 67x. These are growth prices for companies whose truest measure of cash generation is going backwards.
There's also a structural reason valuations stay this high despite the math — Gabaix and Koijen's inelastic market hypothesis. For every $1 of active buying, passive flows inject $5. Elon Musk knows this, which is why he wants SpaceX in the S&P 500.
Full 16-year charts on my Substack. https://cavemanscreener.substack.com/p/building-bridges-to-nowhere-the-magnificent