NAB Morning Call Weekend Edition: How far will AI investment go?
Nov 14, 2025
Lincoln Valentine, a senior analyst for international equities at JBWere, dives into the volatile world of AI investment and big-tech dynamics. He discusses the current land-grab among tech giants, fueled by rising debts amid uncertain future demand. Lincoln contrasts the valuations of companies like Microsoft and Meta, questioning the sustainability of their growth. The talk highlights the risks of over-investment and the long-term viability of AI amidst changing market conditions.
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Episode notes
Big Tech Growth Still Real
- Large tech firms are delivering strong revenue growth even at massive scale, partly from AI contributions.
- Valuations are not uniformly stretched relative to the earnings growth they're currently producing.
CapEx Is Eating Free Cash Flow
- Free cash flow is falling because capex for AI infrastructure is increasing materially.
- Earnings can still grow, but cash returns to shareholders may decline while capex stays high.
Capabilities Versus Real-World Proof
- AI shows clear technical capabilities but also important limitations like hallucinations.
- Significant capital is needed now to realize long-term practical benefits for customers.