In 2025, investors are rewarding the biggest spenders.
And I have data to back it up.
In today’s chart I am measuring the median S&P 500 tech sector stock return by quintile of CapEx spend.
For the “CapEx spend” part of the chart, I normalized each tech company’s CapEx as a % of their cash from operations so we can get a more apples-to-apples comparison across different company sizes.
Here’s how you read the chart below:
From left to right, the tech stocks in bucket one have the lowest CapEx spend and spend increases in buckets two through five (with five being the biggest spenders).
The bars then show the median YTD return of the tech stocks within each bucket.
See how buckets four and five have the highest median tech stock return YTD?
That’s the market rewarding the biggest spenders.
At The Compound
Last week we had Eric Jackson on TCAF.
He’s in search of the next 100 bagger in the market.
Two weeks ago we had the one and only Brian Belski on the show. I have been a follower of Brian’s work for several years and have always enjoyed his evidence-based research process.
He just launched Humilis Investment Strategies with my friend Ryan Edwards to bring his research to the masses. I’m pumped for it.
Brian explained his investment process and new venture below on TCAF. He also dropped some knowledge bombs per usual. Give it a listen!
That’s all for today. Thank you for reading and have a great week!