Cloud Semis: Growing Cloud Capex into 2027

Hyperscalers' spending remains strong so far, with further expansion signaled for 2027 amid FCF turning negative. Positive read for cloud semis (Aspeed and Montage). The Big Four hyperscalers' combined C3Q capex was US$185bn, +90% Y/Y. CY2026 guidance stands at approximately US$170bn for Microsoft, US$195-205bn for Google, US$135-145bn for Meta, and US$220bn for Amazon. Google and Amazon maintained guidance; Meta raised its spending floor US$5bn. Microsoft expects spending to accelerate in January-June 2027, Google anticipates a significant increase in 2027, and Amazon expects meaningfully higher spending. Supply constraints remain the issue: Microsoft's delivery delays and Google's late C3Q turn to third-party computing point to infrastructure bottlenecks. Google, Meta, and Amazon reported negative quarterly FCF of US$9.1bn, US$2.1bn, and US$33.5bn, with Google flagging depreciation, data center operating costs and TPU inventory cash needs as near-term cloud margin headwinds. Sustaine