Hyperscaler ROIIC Peaked Near 40% vs 8% Cost of Capital, AI Capex Math Shows
menhguin · x · 2026-09-19
Citing Mauboussin's new report "To Free or Not to Free (Cash Flow)", MFCamillus argues AI capex economics remain extraordinary:
- Aggregate hyperscaler ROIIC peaked near 40% in Q1 2026 vs an estimated 8% cost of capital
- Consensus expects ROIIC to dip to 23% in Q3 2027 before recovering toward 35% by 2030
- With incremental returns this far above capital cost, 25-75bps rate moves are unlikely to bind AI investment decisions
- The underlying report analyzes FCF across 5 hyperscalers plus 3 others, including why negative free cash flow can be acceptable
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