Nvidia, Micron, Broadcom, Applied Materials Set to Generate $430 Billion in Free Cash Flow as Tech Giants Bleed Cash
Semiconductor companies are poised to become the biggest cash generators of the artificial intelligence boom, while the technology giants spending on AI infrastructure are expected to burn through record amounts of capital.
Cash Flow Shift
According to the research by Bank of America highlighted by The Kobeissi Letter on Sunday, NVIDIA Corp (NASDAQ:NVDA), Micron Technology Inc (NASDAQ:MU), Broadcom Inc (NASDAQ:AVGO) and Applied Materials Inc (NASDAQ:AMAT) are projected to generate a record $430 billion in combined free cash flow over the next 12 months, more than triple their combined total from two years ago.
At the same time, the combined free cash flow of Amazon.com Inc (NASDAQ:AMZN), Google‘s parent company Alphabet Inc(NASDAQ:GOOGL) (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT) and Oracle Corp (NYSE:ORCL) is projected to turn negative for the first time on record.
ETFs in Focus
The largest ETFs that provide exposure to semiconductor companies are the VanEck Semiconductor ETF (NASDAQ:SMH), iShares PHLX SOX Semiconductor Sector Index Fund (NASDAQ:SOXX), and the Direxion Daily Semiconductor Bull 3X ETF (NYSE:SOXL).
SMH and SOXX have gained 63.68% and 85.32%, respectively, year to date, and returned 114.16% and 138.42% over the past year.
SOXL has gained 306.99% year-to-date and 625.51% over the past year.
ETFs tracking the technology companies include Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), the Vanguard Information Tech ETF (NYSE:VGT) and the State Street Technology Select Sector SPDR ETF (NYSE:XLK).
QQQ has returned 18.33% year-to-date and 30.44% over the past year, while VGT has returned 24.95% and 40.91%, year-to-date and over the past year, respectively.
AI Investment Is Driving The Shift
The shift reflects a surge in AI-related capital spending, with these hyperscalers projected to invest about $1.8 trillion in AI infrastructure over 2026 and 2027.
Investors have increasingly rewarded companies supplying AI infrastructure while penalizing the technology giants spending heavily to build it, as questions persist over when those investments will begin generating returns.
In June, Goldman Sachs said the industry’s accelerating capital expenditures would put pressure on profitability metrics as depreciation costs rise.
| COMPANY | LAST CLOSE | YTD | 1 YEAR |
| NVIDIA Corp | Up 4.03% | Up 11.71% | Up 28.58% |
| Micron Technology | Down 1.24% | Up 210.47% | Up 725.65% |
| Broadcom | Down 0.28% | Up 15.06% | Up 45.13% |
| Applied Materials | Up 2.35% | Up 124.09% | Up 205.68% |
| Amazon.com | Down 0.69% | Up 8.32% | Up 8.71% |
| Alphabet (Class A) | Down 0.48% | Up 12.59% | Up 94.21% |
| Meta Platforms | Up 5.97% | Up 2.89% | Down 7.17% |
| Microsoft | Up 0.19% | Down 18.57% | Down 23.44% |
| Oracle | Down 2.48% | Down 28.14% | Down 38.66% |
Benzinga edge rankings indicate NVDA has a Momentum score in the 68th percentile and a Growth score in the 98th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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