Why 2028 Free Cash Flow is the Only Hyperscaler Story That Matters

Why 2028 Free Cash Flow is the Only Hyperscaler Story That Matters

The biggest news yesterday was Meta unveiling its first paid AI model, Muse Spark 1.1, an agentic coding platform that puts them in direct competition with Anthropic and OpenAI. Meta has an advantage here because they own the hardware and the data centers, but the broader read is that frontier models keep getting commoditized and it is a nonstop barrage of competition. My take is that all of it comes down to one chart and one question: does the AI CapEx translate into surging free cash flow by 2028? The consensus from Apollo says the four hyperscalers, Google, Meta, Microsoft, and Amazon, get their free cash flow back to 2023 and 2024 levels by 2028 once the data center build-out tapers, with Amazon and Google leading the way. That is the whole game plan. The bears argue the build-out never ends because you always need the next GPU and the next memory cycle, which turns these into heavy asset companies. I am excited for earnings this month to get a read on it. I also cover the Starbucks story on building its own AI software in-house and cutting Microsoft and IBM spend, the strongest El Niño in 75 years and what it means for food inflation, why Walmart lowering prices is a fake headline, and Netflix exploring live TV and bundles as viewership slips. Rigatoni Capital is a daily morning podcast for long term, buy and hold investors. This is not a show for short term traders or people looking for quick wins. Every morning I go through the most important headlines in finance, markets, and macro, and call out fake narratives in the financial media so you know what actually deserves your attention and what to ignore. Subscribe to Rigatoni Capital on Substack: https://rigatonicapital.substack.com [https://rigatonicapital.substack.com] Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions. #investing #stocks #finance #wallstreet #stockmarket #investor #wealth #money #financialfreedom #passiveincome #dividends #compounding #longterminvesting #buyandhold #valueinvesting #portfoliomanagement #bitcoin #crypto #macro #Nasdaq #SPY #QQQ #SP500 #Hyperscalers #FreeCashFlow #Meta #META #AICapEx #Amazon #AMZN #Google #GOOGL #Microsoft #MSFT #Starbucks #SKHynix #Netflix #NFLX #stockanalysis #marketwatch #RigatoniCapital $QQQ $META $AMZN $GOOGL $MSFT $SBUX $SKHY $NFLX

Tech Bounces Back: Is this a Rotation or Just Consolidation?

Tech and semiconductors bounced this morning, which has everyone asking whether the great rotation is real. Caitlin McCabe at the Wall Street Journal is pointing to equal weight beating market cap weighted year to date as proof, but the gap is small and I think it is too soon to call a new long term regime. My take is that we are really just consolidating. The Nasdaq 100 is sitting right where it was in late May, and once you look back you will probably see the market did nothing for a few weeks in the middle of July while everyone is distracted by the World Cup. I also cover the China news allowing capped purchases of Nvidia H200 chips and why it is more of a trade deal headline than a real change to Nvidia's chip sales, Broadcom's new $30 billion Apple deal, why data center construction growth is slowing due to execution bottlenecks rather than fading demand, and my honest take on Netflix and why it deserves to trade where it is until the quality of content improves. Rigatoni Capital is a daily morning podcast for long term, buy and hold investors. This is not a show for short term traders or people looking for quick wins. Every morning I go through the most important headlines in finance, markets, and macro, and call out fake narratives in the financial media so you know what actually deserves your attention and what to ignore. Subscribe to Rigatoni Capital on Substack: https://rigatonicapital.substack.com [https://rigatonicapital.substack.com] Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions. #investing #stocks #finance #wallstreet #stockmarket #investor #wealth #money #financialfreedom #passiveincome #dividends #compounding #longterminvesting #buyandhold #valueinvesting #portfoliomanagement #bitcoin #crypto #macro #Nasdaq #SPY #QQQ #SP500 #GreatRotation #Semiconductors #Nvidia #NVDA #Broadcom #AVGO #Micron #China #Apple #AAPL #Netflix #NFLX #DataCenters #stockanalysis #marketwatch #RigatoniCapital $QQQ $NVDA $AVGO $CASY $NFLX $AAPL

Sell the Chips, Buy the Hyperscalers: Is Morgan Stanley's Rotation Call Real?

Morgan Stanley's Mike Wilson is telling clients to get out of chip stocks and rotate into the hyperscalers. This morning I walk through whether this rotation is real or just too soon to call. Semis are getting whacked today with Micron, AMD, Broadcom, and Nvidia all selling off, and even Caterpillar and Lam Research are getting hit after their huge runs. Meanwhile financials, transports, healthcare, and biotech are hitting all time highs, with names like Travelers Insurance, Union Pacific, and Eli Lilly ripping. Wilson thinks semis just need a breather and it is the hyperscalers turn to lead. My take is the same as always: it is too soon to proclaim this is the trade for the rest of the year, and the best way to play it is to just own the QQQ so you do not have to pick the leaders. I also cover the SpaceX Nasdaq 100 inclusion and why the free float cap means you will not be as exposed as the headlines suggest, a Palantir price target of $341 built on 2028 free cash flow estimates, and why I still find the SpaceX story boring compared to names like GE Aerospace and TransDigm. Rigatoni Capital is a daily morning podcast for long term, buy and hold investors. This is not a show for short term traders or people looking for quick wins. Every morning I go through the most important headlines in finance, markets, and macro, and call out fake narratives in the financial media so you know what actually deserves your attention and what to ignore. Subscribe to Rigatoni Capital on Substack: https://rigatonicapital.substack.com [https://rigatonicapital.substack.com] Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions. #investing #stocks #finance #wallstreet #stockmarket #investor #wealth #money #financialfreedom #passiveincome #dividends #compounding #longterminvesting #buyandhold #valueinvesting #portfoliomanagement #bitcoin #crypto #macro #Nasdaq #SPY #QQQ #SP500 #MikeWilson #MorganStanley #Hyperscalers #Semiconductors #Micron #Nvidia #NVDA #Broadcom #AVGO #Caterpillar #CAT #LamResearch #LRCX #SpaceX #Palantir #PLTR #stockanalysis #marketwatch #RigatoniCapital $QQQ $NVDA $AVGO $CAT $LRCX $MSFT $AMZN $META $PLTR

Software Job Cuts, Funky Earnings, and Why I'm Not Trimming Caterpillar

We are heading into the dog days of summer with the World Cup on and earnings still a few weeks out. I talk about why the current SaaS software selloff reminds me of the 2022 bear market. I also explain why the AI disruption story hits the stock price first and the job cuts come later. I also flag some funky GAAP accounting to watch, where companies like Amazon have to book gains on their private stakes in Anthropic, which can juice net income. I reviewed my portfolio heading into July and decided not to trim Caterpillar or Lam Research despite both being up huge, because I have always seen them as the ultimate picks and shovels of this build-out. I close with some thoughts on Alex Karp's CNBC interview and why Palantir and the frontier labs are two different worlds. Rigatoni Capital is a daily morning podcast for long term, buy and hold investors. This is not a show for short term traders or people looking for quick wins. Every morning I go through the most important headlines in finance, markets, and macro, and call out fake narratives in the financial media so you know what actually deserves your attention and what to ignore. Subscribe to Rigatoni Capital on Substack: https://rigatonicapital.substack.com [https://rigatonicapital.substack.com] Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions. #investing #stocks #finance #wallstreet #stockmarket #investor #wealth #money #financialfreedom #passiveincome #dividends #compounding #longterminvesting #buyandhold #valueinvesting #portfoliomanagement #bitcoin #crypto #macro #Nasdaq #SPY #QQQ #SP500 #Caterpillar #CAT #LamResearch #LRCX #Microsoft #MSFT #SoftwareStocks #AIDisruption #Palantir #PLTR #AlexKarp #Nvidia #NVDA #Broadcom #AVGO #stockanalysis #marketwatch #RigatoniCapital $QQQ $CAT $LRCX $MSFT $PLTR $NVDA $AVGO

Buy in June and Go Away

Micron reported last night and the stock is swinging hard, which is exactly the kind of summer volatility that gets friends and family texting me asking what to do. My answer this year is simple: buy in June and go away. I bought the QQQ at $687 during the early June flush down and I am not making any more moves. This morning I talk about why the Nasdaq 100 is now my largest holding and why, at age 42, I would rather buy the QQQ on a pullback than try to pick individual Mag 7 winners that keep underperforming the index. I also give my honest take on the Bitcoin selloff, why it is down over 50% from its peak, and why nothing has changed for me on owning it as the best form of money. I close with an interesting theory on Kevin Warsh, Scott Bessent, the eSLR change, and whether banks buying Treasuries can fill the void of a shrinking Fed balance sheet. I am on vacation until July 8th so I will not be doing the daily show, but I will pop on a few times and get a newsletter out. Rigatoni Capital is a daily morning podcast for long term, buy and hold investors. This is not a show for short term traders or people looking for quick wins. Every morning I go through the most important headlines in finance, markets, and macro, and call out fake narratives in the financial media so you know what actually deserves your attention and what to ignore. Subscribe to Rigatoni Capital on Substack: https://rigatonicapital.substack.com [https://rigatonicapital.substack.com] Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions. #investing #stocks #finance #wallstreet #stockmarket #investor #wealth #money #financialfreedom #passiveincome #dividends #compounding #longterminvesting #buyandhold #valueinvesting #portfoliomanagement #bitcoin #crypto #macro #Nasdaq #SPY #QQQ #SP500 #Micron #BuyTheDip #Mag7 #Bitcoin #BTC #KevinWarsh #FederalReserve #eSLR #Apple #AAPL #Nvidia #NVDA #stockanalysis #marketwatch #RigatoniCapital $MU $QQQ $NVDA $AVGO $AAPL $GOOGL $BTC