Can Hyperscalers Earn Their AI Ambitions?

The first half of 2026 was a tale of two quarters for U.S. equity markets, as the S&P 500 experienced a drawdown of ~4.5% in the first quarter, followed by a ~15% rally in the second quarter. As investors look forward to the second half, the artificial intelligence (AI) trade remains top of mind, much as it has over the last three-plus years. With second quarter (Q2) earnings season well underway, attention is laser-focused on capital expenditure (capex) spending signals from the cloud computing “hyperscalers” driving the majority of spend. Here, we take a datadriven approach to help frame the debate on the return on invested capital (ROIC) on hyperscaler AI capex, using various scenarios for a hypothetical “average hyperscaler.” We then compare those return profiles to similar return generating businesses, with the end goal being a clear-minded approach to thinking about the hyperscaler business model for long-term investors.