U.S. Chip Makers to Generate $430B in Free Cash Flow in Next 12 Months, 3x Higher Than 2 Years Ago: BofA

According to Bank of America's analysis via Yahoo Finance on July 14, U.S. semiconductor companies including Nvidia, Micron, Broadcom, and Applied Materials are expected to generate a record $430 billion in free cash flow over the next 12 months, more than triple the levels from two years ago, driven by unprecedented demand for AI chips.

In contrast, hyperscale tech giants Amazon, Alphabet, Meta, Microsoft, and Oracle are projected to see free cash flow turn negative for the first time, erasing the $260 billion peak recorded in 2024. The divergence reflects Big Tech's massive AI capital expenditure surge, expected to jump 70% year-over-year to $700 billion this year, as investor patience with spending intensity wanes. Magnificent Seven valuations have compressed to their lowest in a decade, with premium over S&P 500 falling from 30%+ to just 10%.