The Mag 7 is extremely undervalued right now and this chart is exactly why (Save this).
Milk Road AI Twitter · Milk Road AI (@MilkRoadAI) · 2026-06-29
Milk Road AI argues that Alphabet, Meta, Microsoft, and Amazon are undervalued because markets are mispricing a temporary 2025–2027 free cash flow trough caused by ~$725 billion in combined AI infrastructure capex, with Bloomberg consensus projecting nearly $650 billion in combined FCF by 2030.
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Extraction
Topics: mag-7ai-infrastructure-investmentfree-cash-flowcloud-revenuecapital-expenditure
Claims
- Alphabet, Meta, Microsoft, and Amazon collectively committed approximately $725 billion in capital expenditure for 2026, a 60%+ increase from already-record 2025 levels.
- Amazon's free cash flow fell 95% in Q1 2026 as the company spent $44 billion in a single quarter on AI infrastructure.
- Bloomberg consensus estimates project combined Mag 7 free cash flow approaching $650 billion by 2030, nearly tripling current levels.
- Microsoft's AI business is running at a $37 billion annual revenue run rate, up 123% year over year, with 20 million paid Copilot seats growing at 250% annually.
- Google Cloud revenue surged 63% year over year to $20 billion in Q1 2026, with Alphabet's cloud backlog nearly doubling to $460 billion in one quarter.
Key quotes
The FCF trough you see in this chart from 2025–2027 is not a sign of broken businesses but rather the price of owning the infrastructure layer of the AI economy for the next 20 years.
The window to buy that at a discount closes the moment the market starts pricing the 2028–2030 FCF explosion, and that repricing could happen faster than most expect.
Andy Jassy: 'we're investing to be the meaningful leader, and our future business, operating income, and FCF will be much larger because of it.'