THE SAME HAND
The capex cycle has no exit.
STRATEGIC ADVISORY BRIEF
M Nadal & Co Strategic Advisory | May 2026
In the same week, KKR injected $300 million into a failing private credit vehicle and raised $10 billion for a new AI firm led by the former chief of Amazon Web Services.
Different desks. Same hand.
That is not irony. It is the capital allocation architecture of 2026, written in every hyperscaler’s capex-to-revenue ratio above 45%.
The contradiction in plain sight
The AI infrastructure buildout has a revenue problem that the headline numbers obscure. Google Cloud grew 63% year on year in Q1 2026. Microsoft’s AI business runs at $37 billion annualised, up 123%. AWS posted its fastest growth in fifteen quarters. By any measure, AI revenue is arriving.
And yet Amazon’s free cash flow collapsed to $1.2 billion against $200 billion in committed capex. Meta is tracking toward capital expenditure equal to 54% of sales. Alphabet 46%. Microsoft 47%. These are not ratios that resolve themselves quietly.
The October 2025 SAB identified an 18-24 month investor patience window for spending that runs ahead of revenue. We are six months in. The thesis holds. The mechanism has shifted. Revenue arrived faster than expected. FCF collapsed anyway. The input cost, electricity above all, is growing faster than the output revenue it is supposed to justify, and this even before the Hormuz crisis hit.
That is a more precise and more alarming finding than the original timing argument.
