CapEx Fears
This Week in the Market
This week is being driven by concern around capital expenditure guidance, particularly from Big Tech, signaling spend far above what the market was prepared for. The fear is not that demand is collapsing, but that AI investment may take longer to translate into returns.
Big Tech is choosing to invest aggressively in long-term capacity while the market demands near-term efficiency. We do not believe this is as alarming as price action suggests. Elevated capex signals confidence, not weakness, and history has shown that periods of heavy investment often precede the next leg of durable growth. In our view, this reaction is more about patience than proof, and markets are overcorrecting to uncertainty rather than evidence.
Taking Advantage of CapEx Fears
It would be foolish to assume all of Big Tech is just burning 100's of billions of dollars with no plan. The market will realize their fears are irrational but in the meantime we can get some good deals.
Both MSFT and AMZN are down significantly from their highs and seem to be safe plays. Both companies announced far higher CapEx guidance which sent their shares lower. We prefer AMZN and will outline a buying strategy in the next section.
Amazon.com, Inc (AMZN) – Non-Linear Accumulation Strategy
Our approach is structured around staged accumulation, increasing size into weakness. Initial exposure is minimal at these levels, with size ramped aggressively as price dislocates downward further. This non-linear allocation optimizes the risk-reward by lowering our average cost basis and maximizing upside on the rebound.
We believe AMZN under $210 is a good buying zone, but it's important to get more aggressive if the price falls below $200.
We have been buying below $210, and plan to add significantly upon further weakness.
Disclaimer: At any time, A4K Capital and its affiliates may hold positions in the assets and/or contracts discussed. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
