I’m not the most active person on LinkedIn, more of a quiet observer who scrolls now and then. I do make new connections occasionally (selectively, of course). At the risk of upsetting some people, LinkedIn can sometimes feel like a stage where many are more interested in “showing off” than sharing real insights or adding value.
One person I always make a point to follow is Denise Chisholm. Her insights are consistently outstanding, often making me pause, think, and challenge my own views. Here is another timely article from her.
Here is a section:
With headlines swirling about aggressive capital spending in tech, it is natural for investors to ask: is this starting to look like a replay of 2000? Back then, the dot-com bust was defined by over-investment — billions poured into projects that never earned a return. Today, the economy feels tethered once again to tech capex and AI buildout stories. The data suggests we are in a very different place.
Start with the big picture: capital expenditures relative to free cash flow. If you total all capex across the top 3000 companies and divide it by the free cash flow they generate, you get a quick read on how aggressive corporate spending really is.
In 1998–2000, companies were spending 3.5–4x their free cash flow on capex, classic boom-era behavior. Today, that ratio is below 1, even lower than during the energy capex surge of 2006–2007. In plain terms, companies are spending what they earn, not what they borrow. That shift alone marks a major departure from the speculative excesses of the past.
The contrast inside the tech sector is even more striking. Before the bubble burst, tech firms spent more than they earned for nearly a decade, an entire cycle of outspending free cash flow. Today, it is the reverse. For 20 years, the sector has generated cash faster than it is invested it. That does not guarantee every AI dollar will earn its keep, but it does mean the industry is funding growth from a position of strength, not speculation.
The strength seems to run deeper than just the headline names. While large-cap tech dominates dollar profits, median tech earnings have been strong too. That is a major difference from 2000, when the typical tech company’s earnings, margins, and ROE all peaked in the mid-90s, long before prices did. Valuations may be elevated, but they are supported by real fundamentals, not just narrative.
