Big Tech Has Til Year-End…or Else.

The central question revolves around how long investors will continue to support Big Tech's heavy capital expenditure on AI before demanding tangible returns. Nick Colas argues that Big Tech has approximately 12 months to demonstrate the value of its AI investments, pointing out that stock performance has already plateaued. He highlights a concerning trend: Big Tech's asset efficiency is declining, with revenue-to-PPE ratios now lower than that of capital-intensive companies like Ford. Jessica Rabe suggests investors have a choice: stick with Big Tech through this transition or reallocate capital to non-U.S. markets, noting that the S&P 500 is heavily overweight in tech compared to the MSCI All-Country World Index. The discussion also addresses the potential for a multi-year cycle of international outperformance if Big Tech's AI investments don't pay off.