Saturday, November 30, 2024

Changes in Capex Intensity Matter More than Intensity Itself

Lots of industries are capital intensive, and one might argue such industries tend to be slower growing, such as carbon-based energy; utilities of all types and telecommunications. So it is almost pointless to complain about high levels of capex in such industries. 


Industry

Sample Public Company

Annual Capex as % of Revenue

Oil & Gas

Exxon Mobil (XOM)

15-25%

Utilities

NextEra Energy (NEE)

15-25%

Telecommunications

Verizon Communications (VZ)

15-25%

Semiconductors

Intel Corporation (INTC)

15-25%

Automotive

Ford Motor Company (F)

10-15%


More-relevant questions might be raised about increasing levels of investment, not necessarily high levels of investment that are steady. And that clearly is the case for hyperscale cloud computing “as a service” providers. 


source: Tom Tunquz 


Other industries feature lower levels of annual capital investment intensity, but might see capex increases to support AI operations, including software. 


Industry

Company

Annual Capex as % of Revenue

Software

Microsoft (MSFT)

< 10%

Biotechnology

Amgen (AMGN)

< 10%

Retail

Amazon (AMZN)

< 10%

Consulting

McKinsey & Company (Private)

< 10%

Advertising

WPP plc (WPP)

< 10%


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