Klement sees "capex pickle" with S&P 500 down roughly 35%

Through 2024 and most of 2025, a hyperscaler's announcement of higher capex for AI infrastructure was greeted as bullish — its stock jumped. The article notes that Microsoft and Amazon were seeing cloud revenue climb 30% to 40% year over year on AI-related demand. That enthusiasm faded as free cash flow deteriorated, and several hyperscalers are expected to post negative free cash flow over the next few years; in the most recent quarter, companies that raised their 2026 capex guidance were sold off hard if the market was unimpressed by their growth. At the same time, the article points out that the projected spending flows to other publicly traded companies, lifting their revenue and profits — which is what turns the dynamic against itself. The author's own view is that data center capex is becoming an issue and cannot keep climbing forever, whether because too many data centers were built too quickly or because funding options run out. After that, the article says the outcome is hard to predict: hyperscalers may slow spending and see their financials improve while other companies' earnings decline, they may keep spending despite share-price damage, or things may balance out. It also allows that Klement may be right, and suggests a correction would be a helpful reset, concluding that long-term investors don't necessarily need to adjust their portfolios but should understand why volatility may rise.