Big Tech stocks hit by fears over massive AI spending could be setting up a buying opportunity, according to former Goldman Sachs Asset Management CIO Gary Black.
In a new post on X, Black says investors may be overreacting to eye-popping capital expenditure forecasts for 2026 to the tune of $655 billion.
Black notes that early-year spending plans often look scarier than they end up being.
“I see a buying opportunity in Big Tech names that have been hammered because of outsized 2026 CapEx forecasts. Now is the beginning of the year, and CapEx budgets always start high and then shrink as the year progresses as companies decide they don’t need all that investment.”
He also points out that capital spending does not hit company profits the same way as everyday expenses do. Black adds that many of the companies drawing criticism were careful to show investors how the spending would affect profits.
“Unlike normal operating costs, CapEx gets amortized normally over five years and so the expenditure doesn’t hit the P&L all at once. Most of the companies shown packaged their FY’26 CapEx forecasts with FY’26 profit forecasts so investors could see the current year impact on profits.”
Amid the market drawdown, Black names Google and Meta as two examples where valuation now looks attractive despite spending concerns.
“GOOGL at a 2026 P/E of 28x versus 20% long-term EPS growth and META at a 2026 P/E of 22x versus 18% EPS growth both look compelling here.”
As of Friday’s close, GOOGL is trading at $322, and META is valued at $661 per share.
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