A historic wave of technology capital expenditures is transforming the entire market:
The S&P 500 Information Technology sector’s capital expenditures to depreciation ratio has soared to about 1.94, the highest level in at least 20 years.
This metric measures the ratio of a company’s investment in new assets relative to the depreciation rate of its existing assets.
The ratio has surged 76% since 2021, marking the fastest growth rate since the post-2008 economic recovery.
It is currently 21% higher than the 2018 peak of approximately 1.60.
In contrast, this metric for the S&P MidCap 400 index has declined 23% over the past two years to around 1.38, near its lowest level in 15 years.
Large technology companies’ investments in artificial intelligence are growing explosively.
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A historic wave of technology capital expenditures is transforming the entire market:
The S&P 500 Information Technology sector’s capital expenditures to depreciation ratio has soared to about 1.94, the highest level in at least 20 years.
This metric measures the ratio of a company’s investment in new assets relative to the depreciation rate of its existing assets.
The ratio has surged 76% since 2021, marking the fastest growth rate since the post-2008 economic recovery.
It is currently 21% higher than the 2018 peak of approximately 1.60.
In contrast, this metric for the S&P MidCap 400 index has declined 23% over the past two years to around 1.38, near its lowest level in 15 years.
Large technology companies’ investments in artificial intelligence are growing explosively.