Editor’s note: Porter is attending a family wedding this weekend, and turned today’s Journal over to Porter & Co. Trading Club analyst Ross Hendricks, who looks at the risks to the overall economy of the artificial intelligence (“AI”) buildout.

There is a massive dichotomy in today’s stock market.

On the one hand, we’re in the midst of one of the greatest earnings booms in the history of the U.S. stock market, which is pushing stock prices higher, making it difficult to become too bearish in the short-term. But the problem is that this earnings growth is almost entirely fueled by a capex boom focused on one single area of the economy: data-center construction for the artificial intelligence (“AI”) revolution. Capital spending on every other area of the economy aside from data centers – housing, commercial and industrial, office buildings, etc. – has fallen $120 billion since 2024.

Every prior capex boom throughout history has ended the same way: when the money runs out. And we’re officially reaching that point, as the companies behind this capex mania are exhausting their access to cheap capital.

Alphabet (GOOG) recently posted negative free cash flow (“FCF”) for the first time since going public in 2004. Google is one of the most profitable ad businesses ever built – now with YouTube, Android, and a growing cloud arm. All of this combined used to produce mountains of cash. But now with capex doubling to nearly $45 billion in a single quarter, the company burned through $6 billion in cash for the quarter. And this trend shows no sign of reversing, with management guiding to $200 billion in capex this year, more than doubling from $91 billion last year.