How to Track AI Capex Efficiency: 3-Metric Quarterly Monitoring Framework for Tech Investors

Why One-Time Analysis Isn't Enough

$329.8 billion. That's how much Amazon, Google, Meta, and Microsoft spent on AI infrastructure in the trailing twelve months ending Q3 2025. This represents the largest capital deployment cycle in tech history—exceeding the GDP of Finland, Chile, or Portugal.

But here's what most investors get wrong: they analyze this spending once, form an opinion, and move on. They read a quarterly earnings report, see "Meta capex: $15.7B" or "Microsoft capex up 50%," and think they understand the story.

They don't.

AI capital spending is inherently lumpy. Companies don't buy GPUs or open data centers in smooth monthly increments. They make massive quarterly purchases ($20-30B in capex spikes) followed by periods of integration. A single quarter's capex number tells you almost nothing about whether a company is:

• Accelerating investment (strategic shift)
• Maintaining steady infrastructure buildout (business as usual)
• Decelerating after completing a major phase (efficiency improvement)

The only way to distinguish these patterns is through quarterly trend monitoring—tracking the same metrics every 90 days to reveal directional changes that static snapshots miss.

This guide provides a replicable 3-metric framework you can run every quarter in 5-10 minutes to monitor AI capex efficiency across all four hyperscalers. By the end, you'll know exactly which metrics to track, how to calculate them (both manually and using MetricDuck), and what thresholds signal concern versus opportunity.

Most importantly, you'll have a monitoring system you can maintain quarterly—not a one-time analysis that goes stale in 90 days.

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The 3-Metric Monitoring Framework

Metric #1: Capex/Revenue 8-Quarter Trend

What it measures: Capital intensity—how much of each revenue dollar gets reinvested into infrastructure.

Why it matters: This ratio reveals whether a company is maintaining, scaling, or dramatically shifting its capital allocation strategy. For mature tech companies, sustained increases of 5-10+ percentage points over 8 quarters signal a fundamental business model change.

How to calculate:

Capex/Revenue Ratio (%) = (Capital Expenditures / Total Revenue) × 100

8-Quarter Trend = Compare first 4 quarters vs. last 4 quarters in your analysis window

Where to find the data (manual method):

1. Capital Expenditures: Cash Flow Statement → "Payments to acquire property and equipment" (or "Capital expenditures" or "Purchases of property and equipment")
2. Total Revenue: Income Statement → First line item (typically "Total revenue" or "Net revenues")

Data source: SEC 10-Q quarterly filings (sec.gov/edgar)

How to interpret:

Ratio Level	Signal	Interpretation
< 10%	Low intensity	Asset-light business model (typical for pure software)
10-20%	Moderate	Growing infrastructure needs (cloud platforms)
20-30%	High	Major infrastructure buildout (AI transition)
> 30%	Extreme	Betting the company on capex-intensive strategy

8-Quarter Change	Signal	Interpretation
< 3pp increase	Stable	Maintaining current capital allocation
3-7pp increase	Moderate growth	Scaling infrastructure with business
7-10pp increase	High growth	Significant strategic shift
> 10pp increase	Extreme acceleration	Fundamental business model transformation

Current snapshot (Q3 2025):

Company	Early 2023	Q3 2025	Change	Signal
META	20.2%	33.0%	+12.8pp	Extreme acceleration
GOOGL	10.4%	20.1%	+9.8pp	High growth
MSFT	15.4%	23.5%	+8.1pp	High growth
AMZN	9.2%	17.4%	+8.1pp	High growth

What this tells us: All four hyperscalers are dramatically increasing capital intensity, but Meta's +12.8 percentage point jump is unprecedented for a company of its scale. This represents an existential bet on AI infrastructure, with $1 of every $3 in revenue now going to capex.

What to watch next quarter (Q4 2025):

• Does the ratio continue climbing (sustained acceleration)?
• Does it stabilize (buildout phase complete)?
• Does it decline (pivot or efficiency improvement)?

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Metric #2: Capex/Depreciation Ratio (Earnings Quality Signal)

What it measures: The ratio of new capital spending to depreciation expense—reveals potential accounting manipulation.

Why it matters: This is the metric that validates Michael Burry's August 2024 thesis about $176B in understated depreciation. When companies spend 3-4x their depreciation expense for 8+ consecutive quarters, they're either growing extremely fast or extending asset useful lives to suppress depreciation (inflating reported earnings).

For mature hyperscalers with revenue growth in the low-to-mid teens, ratios above 2.5x sustained over multiple quarters raise serious earnings quality concerns.

How to calculate:

Capex/Depreciation Ratio = Capital Expenditures / Depreciation & Amortization Expense

Sustained Analysis = Calculate average over 8 quarters to filter one-time spikes

Where to find the data (manual method):

1. Capital Expenditures: Cash Flow Statement → "Payments to acquire property and equipment"
2. Depreciation & Amortization: Cash Flow Statement → "Depreciation and amortization" (or Income Statement → "Depreciation, depletion and amortization")

How to interpret:

Ratio Level	Signal	Interpretation
1.0-1.5x	Normal	Steady-state replacement capex, conservative accounting
1.5-2.0x	Growth mode	Expanding infrastructure faster than depreciation, but reasonable
2.0-2.5x	Warning zone	Monitor closely for useful life extensions
> 2.5x	Red flag	Likely extending useful lives to suppress depreciation expense

The accounting mechanism:

When you buy AI infrastructure (GPUs, servers, data centers), you don't expense the cost immediately—you depreciate it over an assumed "useful life":

• 5-year useful life: Depreciate 20% per year ($100B capex → $20B annual depreciation)
• 10-year useful life: Depreciate 10% per year ($100B capex → $10B annual depreciation)

By extending useful lives from 5 to 10 years, a company can cut depreciation expense in half, directly boosting reported earnings and margins. But this only works if the assets actually last 10 years—questionable for rapidly-evolving GPU technology (Nvidia releases new architectures every 1-2 years).

Current snapshot (Q3 2025, 8-quarter average):

Company	Avg Ratio	Range	Signal	Verdict
GOOGL	3.76x	3.28x - 4.49x	🚩 Red Flag	Extended useful lives masking true costs
META	2.91x	1.90x - 3.81x	🚩 Red Flag	Possible earnings manipulation
MSFT	1.89x	1.48x - 2.31x	✓ Normal	Conservative depreciation
AMZN	1.74x	1.28x - 2.11x	✓ Normal	Conservative depreciation

Deep dive on Google (3.76x ratio):

Google's Q3 2025 TTM numbers:

• Capex: $77.9B
• Depreciation: $19.3B
• Gap: $58.6B annually

This gap has been sustained at 3.28x - 4.49x for 8 consecutive quarters (2024-2025). For a company with ~15% revenue growth, this ratio suggests either:

1. Legitimate scenario: Massive one-time infrastructure buildout that will generate 3-4x revenue growth in coming years
2. Manipulation scenario: Extended useful lives from 4-5 years to 8-10 years, suppressing $20-30B in annual depreciation expense

Given Google's steady revenue growth (not 3-4x acceleration), option #2 appears more likely.

What to watch next quarter (Q4 2025):

• Does GOOGL ratio decline toward 3.0x (improvement) or stay above 3.5x (sustained manipulation)?
• Does META ratio cross below 2.5x threshold (improvement) or rise further (worsening)?

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Metric #3: Growth Alignment (Capex vs. Revenue)

What it measures: Whether capital spending is scaling proportionally with revenue growth.

Why it matters: Efficient capital deployment means capex grows in line with revenue (or slightly faster during infrastructure buildout phases). When capex growth far exceeds revenue growth for multiple quarters, it signals either:

• Forward-looking investment (capex today → revenue in 2-3 years)
• Capital inefficiency (spending increasing without revenue payoff)

How to calculate:

YoY Capex Growth (%) = ((Current TTM Capex - Prior Year TTM Capex) / Prior Year TTM Capex) × 100

YoY Revenue Growth (%) = ((Current TTM Revenue - Prior Year TTM Revenue) / Prior Year TTM Revenue) × 100

Growth Gap = YoY Capex Growth - YoY Revenue Growth

Where to find the data (manual method):

Use trailing-twelve-month (TTM) figures to smooth quarterly seasonality:

1. Sum last 4 quarters of capex → Current TTM Capex
2. Sum same 4 quarters from prior year → Prior Year TTM Capex
3. Repeat for revenue
4. Calculate YoY growth rates and compare

How to interpret:

Growth Gap	Signal	Interpretation
< 5pp	Aligned	Capex scaling efficiently with revenue
5-10pp	Moderate	Acceptable for growth/buildout phase
10-20pp	Misaligned	Monitor closely—capex outpacing returns
> 20pp	Warning	Capital inefficiency or speculative building

Current snapshot (Q3 2025 TTM YoY):

Company	Revenue Growth	Capex Growth	Gap	Alignment
AMZN	0.0%	+11.6%	+11.6pp	Misaligned
META	0.0%	0.0%	0pp	Aligned
MSFT	0.0%	0.0%	0pp	Aligned
GOOGL	Insufficient data	0.0%	N/A	N/A

Note on Q3 2025 data: The 0.0% growth figures for most companies likely reflect data timing issues in our TTM YoY analysis (comparing Q3 2025 TTM vs Q3 2024 TTM may not capture full year-over-year dynamics). The AMZN result (+11.6% capex vs 0% revenue) is noteworthy and worth verifying in Q4 2025 earnings.

What to watch next quarter (Q4 2025):

• Recalculate with fresh Q4 data to confirm YoY growth alignment
• Look for companies where capex growth is 15-20pp above revenue growth
• Check management commentary: Are they guiding for revenue acceleration to justify capex?

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Step-by-Step: How to Monitor These Metrics Quarterly

Method 1: Manual Analysis (Bloomberg/FactSet/SEC EDGAR)

Time required: 60-90 minutes per company (4-6 hours for all four hyperscalers)

Step 1: Gather 8 quarters of data (30 min per company)

1. Go to SEC EDGAR: sec.gov/edgar/searchedgar/companysearch.html
2. Search ticker (e.g., "MSFT")
3. Filter for Form Type: "10-Q" (quarterly) and "10-K" (annual)
4. Download last 8 quarters of 10-Q filings + most recent 10-K

Step 2: Extract financial data (20 min per company)

Open each 10-Q and navigate to:

For Capex:

• Condensed Consolidated Statements of Cash Flows
• Line item: "Payments to acquire property and equipment" (or similar)
• Note: This is usually a negative number (cash outflow)

For Revenue:

• Condensed Consolidated Statements of Income
• Line item: "Total revenue" or "Net revenues"

For Depreciation:

• Consolidated Statements of Cash Flows (operating section)
• Line item: "Depreciation and amortization"

Step 3: Build Excel analysis (10 min per company)

Create spreadsheet with columns:

Quarter | End Date | Revenue | Capex | Depreciation | Capex/Rev % | Capex/Deprec

Calculate:

• Capex/Revenue: = (Capex / Revenue) * 100
• Capex/Depreciation: = Capex / Depreciation
• 8Q Trend: First 4Q average vs Last 4Q average

Step 4: Calculate TTM YoY growth (10 min)

Add TTM columns:

TTM Revenue (sum last 4Q) | Prior TTM Revenue | YoY Growth %
TTM Capex (sum last 4Q) | Prior TTM Capex | YoY Growth %

Total time for 4 companies: 240-360 minutes (4-6 hours)

Pros:

• Complete control over data sources
• No subscription required (SEC EDGAR is free)
• Audit trail to original filings

Cons:

• Extremely time-consuming
• Error-prone (manual data entry)
• No trend visualization
• Must repeat entire process every quarter

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Method 2: MetricDuck Platform (Automated)

Time required: 5 minutes for all four hyperscalers

Step 1: Screen for high capex intensity (1 minute)

1. Go to metricduck.com/screener
2. Add filter: capex / revenues
3. Set operator: >=
4. Set threshold: 15 (captures companies with 15%+ capital intensity)
5. Set period type: Q (quarterly)
6. Apply sector filter: Technology, Communication Services
7. Run screen

Result: Returns AMZN, GOOGL, META, MSFT + other infrastructure-heavy tech companies

Step 2: Analyze 8-quarter trends (2 minutes)

1. Click on any company from results (e.g., META)
2. Navigate to Metrics tab
3. Add metric: capex / revenues
4. Select period type: Q.TREND8 (8-quarter rolling trend)
5. View trend chart showing:
   • Starting value (first 4Q average)
   • Ending value (last 4Q average)
   • Linear regression slope
   • Change in percentage points

What you see instantly:

• META: 20.2% → 33.0% (+12.8pp)
• GOOGL: 10.4% → 20.1% (+9.8pp)
• MSFT: 15.4% → 23.5% (+8.1pp)
• AMZN: 9.2% → 17.4% (+8.1pp)

Step 3: Screen for depreciation red flags (1 minute)

1. Return to Screener
2. Add filter: capex / deprec_amort
3. Set threshold: >= 2.5 (red flag threshold)
4. Set period type: Q.MED8 (8-quarter median, filters volatility)
5. Run screen

Result:

• GOOGL: 3.76x average (RED FLAG)
• META: 2.91x average (RED FLAG)
• MSFT: 1.89x (passes screen at lower threshold)
• AMZN: 1.74x (passes screen at lower threshold)

Step 4: Subscribe to earnings notifications (1 minute)

1. Add companies to your watchlist: AMZN, GOOGL, META, MSFT
2. Subscribe to earnings alerts for each company
3. You'll receive an email notification when they release quarterly earnings (typically late January, April, July, October)
4. After receiving the alert, log in to view updated metrics and run your 3-metric analysis

Result: Never miss an earnings release—get notified automatically when it's time to review your framework. This eliminates the need to manually track earnings calendars.

Total time for 4 companies: 5 minutes

Time savings vs. manual method: 235-355 minutes (94% faster)

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Comparison: Manual vs. MetricDuck

Task	Manual (Bloomberg/Excel)	MetricDuck	Time Saved
Data collection (8Q, 4 companies)	120 min	0 min (pre-loaded)	120 min
Ratio calculations	40 min	0 min (pre-computed)	40 min
8Q trend analysis	60 min	30 sec	59.5 min
Depreciation screening	30 min	30 sec	29.5 min
Earnings notifications	N/A (manual calendar tracking)	60 sec	Never miss reports
TOTAL	250 min (4.2 hours)	5 min	245 min

Cost comparison:

• Bloomberg Terminal: $24,000/year (requires subscription)
• FactSet: $12,000-20,000/year (requires subscription)
• MetricDuck: $19/month = $228/year (105x cheaper than Bloomberg)

ROI calculation: If your time is worth $100/hour:

• Manual quarterly analysis: 4 hours × $100 = $400/quarter → $1,600/year
• MetricDuck analysis: 5 min × $100/60 min = $8.33/quarter → $33/year
• Time savings value: $1,567/year
• Net ROI after subscription: $1,567 - $228 = $1,339/year

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Current Snapshot: Q3 2025 Analysis

Let's apply the 3-metric framework to the latest data (trailing twelve months ending September 30, 2025).

Microsoft (MSFT) - Overall Grade: A

Metric #1: Capex/Revenue Trend

• Current intensity: 23.5%
• 8-quarter change: +8.1pp (from 15.4%)
• Signal: High growth (significant AI buildout)
• Assessment: Moderate increase reflecting Azure AI scaling

Metric #2: Capex/Depreciation Ratio

• 8-quarter average: 1.89x
• Range: 1.48x - 2.31x
• Signal: Normal (conservative accounting)
• Assessment: Below 2.0x threshold—no manipulation concerns

Metric #3: Growth Alignment

• TTM capex growth: 0.0% (data limited)
• TTM revenue growth: 0.0% (data limited)
• Gap: N/A
• Assessment: Requires Q4 2025 update for full picture

Latest TTM (Q3 2025):

• Revenue: $293.8B
• Capex: $69.0B
• Depreciation: $39.8B
• Capex/Revenue: 23.5%
• Capex/Depreciation: 1.73x

Verdict: Microsoft earns the highest grade for transparent AI investment. The company is increasing capex intensity significantly (+8.1pp), but maintains conservative depreciation practices (1.89x ratio well below 2.5x threshold). The tight range (1.48x-2.31x) indicates consistent accounting policies with minimal manipulation risk.

When you invest in MSFT, you're getting:

• ✓ Substantial AI infrastructure buildout ($69B annually)
• ✓ Transparent accounting (no hidden costs)
• ✓ Reliable earnings quality (margins reflect true economics)

What to watch Q4 2025: Does capex/revenue ratio stabilize around 23-24% (buildout phase complete) or continue climbing toward 25-27% (sustained acceleration)?

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Amazon (AMZN) - Overall Grade: A-

Metric #1: Capex/Revenue Trend

• Current intensity: 17.4%
• 8-quarter change: +8.1pp (from 9.2%)
• Signal: High growth (nearly doubling intensity)
• Assessment: Moderate increase, but from low base

Metric #2: Capex/Depreciation Ratio

• 8-quarter average: 1.74x
• Range: 1.28x - 2.11x
• Signal: Normal (most conservative in group)
• Assessment: Well below 2.0x—aggressive depreciation schedules

Metric #3: Growth Alignment

• TTM capex growth: +11.6%
• TTM revenue growth: 0.0%
• Gap: +11.6pp
• Assessment: Misaligned (capex outpacing revenue)—watch closely

Latest TTM (Q3 2025):

• Revenue: $691.3B
• Capex: $120.1B
• Depreciation: $61.9B
• Capex/Revenue: 17.4%
• Capex/Depreciation: 1.94x

Verdict: Amazon is the largest absolute spender ($120.1B TTM—36% of total hyperscaler capex) but maintains the most conservative accounting. The 1.74x capex/depreciation ratio is lowest in the group, indicating Amazon is front-loading depreciation costs rather than extending useful lives.

However, the growth misalignment is notable: capex up 11.6% while revenue flat suggests either:

• Forward-looking AWS AI infrastructure investment (1-2 year payoff lag)
• Capital inefficiency requiring scrutiny

Why not an A grade? The capex/revenue growth misalignment and complexity of evaluating diversified business (AWS + retail/logistics) make this harder to assess than pure-play cloud (MSFT).

What to watch Q4 2025:

• Does revenue growth accelerate to justify 11.6% capex growth?
• Does capex/depreciation ratio stay below 1.8x (maintaining conservative accounting)?

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Meta (META) - Overall Grade: C

Metric #1: Capex/Revenue Trend

• Current intensity: 33.0%
• 8-quarter change: +12.8pp (from 20.2%)
• Signal: Extreme acceleration (highest in group)
• Assessment: Unprecedented for company of this scale

Metric #2: Capex/Depreciation Ratio

• 8-quarter average: 2.91x
• Range: 1.90x - 3.81x
• Signal: Red flag (above 2.5x threshold)
• Assessment: Possible earnings manipulation via useful life extensions

Metric #3: Growth Alignment

• TTM capex growth: 0.0% (data limited)
• TTM revenue growth: 0.0% (data limited)
• Gap: N/A
• Assessment: Appears aligned in available data, but requires verification

Latest TTM (Q3 2025):

• Revenue: $189.5B
• Capex: $62.7B
• Depreciation: $17.7B
• Capex/Revenue: 33.1%
• Capex/Depreciation: 3.55x

Verdict: Meta is making the most extreme capital allocation bet in the group—spending $1 of every $3 in revenue on AI infrastructure. The 12.8pp increase over 8 quarters represents a fundamental business model transformation.

However, the 2.91x capex/depreciation ratio raises earnings quality concerns. Meta is spending $62.7B annually while depreciating only $17.7B—a $45B gap that suggests either:

• Very long assumed useful lives (8-10 years for AI GPUs—questionable)
• Rapid asset growth requiring much higher future depreciation

The wide range (1.90x-3.81x) indicates lumpy investment patterns or inconsistent depreciation policies.

Why not a D or F grade? Meta is transparent about the massive spending (unlike companies hiding it). Management has articulated clear AI product roadmap (Llama models, AI advertising, metaverse integration). The risk is execution, not deception—but investors should discount earnings by 15-25% to account for potential depreciation understatement.

What to watch Q4 2025:

• Does capex/revenue cross 35% (further acceleration) or stabilize at 32-33%?
• Does capex/depreciation ratio decline below 2.5x (improvement) or stay above 3.0x (sustained concern)?
• Do AI products (Llama, AI ads) show revenue traction justifying the investment?

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Google (GOOGL) - Overall Grade: D

Metric #1: Capex/Revenue Trend

• Current intensity: 20.1%
• 8-quarter change: +9.8pp (from 10.4%)
• Signal: High growth (nearly doubling)
• Assessment: Fundamental shift from capital-light to infrastructure-heavy model

Metric #2: Capex/Depreciation Ratio

• 8-quarter average: 3.76x
• Range: 3.28x - 4.49x
• Signal: Highest red flag in group
• Assessment: Sustained manipulation likely (8 consecutive quarters above 3.0x)

Metric #3: Growth Alignment

• TTM capex growth: 0.0% (data limited)
• TTM revenue growth: Insufficient data
• Gap: N/A
• Assessment: Cannot assess—requires full data update Q4 2025

Latest TTM (Q3 2025):

• Revenue: Data unavailable (showing $0 in analysis—data quality issue)
• Capex: $77.9B
• Depreciation: $19.3B
• Capex/Revenue: 20.1% (from quarterly data)
• Capex/Depreciation: 4.03x (current quarter)

Verdict: Google shows the worst earnings quality signals in the analysis. The 3.76x average capex/depreciation ratio sustained at 3.28x-4.49x for 8 consecutive quarters is not a timing anomaly—it's a policy.

Google is spending $77.9B annually on capex while depreciating only $19.3B—a $58.6B gap. For a company with ~15% revenue growth (not 300%), this ratio strongly suggests extended useful lives from 4-5 years to 8-10 years, suppressing $20-30B in annual depreciation expense.

This creates two problems:

1. Overstated current earnings: Reported profits may be 15-25% higher than economic reality
2. Deferred future costs: When assets are eventually replaced/retired, catch-up depreciation will hit income statements

Why D (not F)? Google has strong revenue growth in Google Cloud Platform (GCP) and AI products (Gemini, AI Overviews, Workspace AI). The company may legitimately be growing cloud infrastructure faster than current revenue reflects (forward-looking investment). But the magnitude of the gap demands scrutiny.

What to watch Q4 2025:

• Does capex/depreciation ratio finally decline below 3.5x (policy change)?
• Does management address depreciation practices in earnings call?
• Do analysts question the accounting in Q&A?

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Combined Hyperscaler Totals (Q3 2025 TTM)

Total AI Infrastructure Spending: $329.8B

• Amazon: $120.1B (36.4% of total)
• Google: $77.9B (23.6%)
• Microsoft: $69.0B (20.9%)
• Meta: $62.7B (19.0%)

Average Capex/Revenue: 23.5% (weighted by revenue) Average Capex/Depreciation: 2.33x (weighted average)

Trend: All four companies increasing capex intensity 8-13pp over 8 quarters—uniform AI arms race.

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Quarterly Monitoring Schedule

When to Update Your Analysis

Q4 2025 Earnings: Late January - Early February 2026

• Microsoft: Typically reports last week of January
• Alphabet (Google): Typically first week of February
• Meta: Typically first week of February
• Amazon: Typically first week of February

Q1 2026 Earnings: Late April 2026 Q2 2026 Earnings: Late July 2026 Q3 2026 Earnings: Late October 2026

What to Check Each Quarter

1. Metric #1 Update: Capex/Revenue Trend

• Did the ratio increase, stabilize, or decline?
• Calculate new 8Q trend (drop oldest quarter, add newest)
• Compare current quarter to Q3 2025 baseline

2. Metric #2 Update: Capex/Depreciation Ratio

• Did any company cross below 2.5x threshold (improvement)?
• Did any company's ratio worsen (new high in range)?
• Check depreciation policy changes in 10-Q footnotes

3. Metric #3 Update: Growth Alignment

• Recalculate TTM YoY growth with fresh data
• Identify companies where capex growth exceeds revenue growth by >15pp
• Review management guidance for 2026 capex plans

4. Management Commentary Review

• Read earnings call transcripts for capex guidance
• Note any changes to depreciation policies (usually buried in footnotes)
• Track analyst questions about capital efficiency

How to Track Changes

Manual Method:

• Repeat SEC EDGAR analysis (60-90 min per company)
• Update Excel spreadsheet with new quarter
• Recalculate all ratios and trends

MetricDuck Method:

• Receive email notification when companies release earnings
• Data auto-updates after earnings filings processed (1-2 days post-earnings)
• Log in to view updated Q.TREND8 charts and run 3-metric analysis (2 minutes)

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Why This Framework Works

1. Filters Quarterly Noise

AI capex is lumpy by nature. A company might spend $25B one quarter (major GPU delivery) and $15B the next (integration phase). Single-quarter snapshots create false signals.

The 8-quarter window smooths this volatility, revealing true directional trends:

• Meta's +12.8pp increase over 8Q = sustained acceleration (not one-time spike)
• Google's 3.76x depreciation ratio for 8Q = policy (not timing anomaly)

2. Reveals Patterns Invisible to Traditional Analysis

Bloomberg Terminal shows: "META capex: $15.7B (Q3 2025)"

This framework shows: "META capex intensity up 63% from 20.2% to 33.0% over past 8 quarters while depreciation ratio stayed above 2.5x for 6 consecutive quarters—existential AI bet with earnings quality concerns"

The first is a data point. The second is actionable intelligence.

3. Comparable Across Companies

Absolute capex numbers ($120B for Amazon vs $63B for Meta) are misleading due to company size differences.

Ratios (capex/revenue, capex/depreciation) normalize for scale:

• Amazon: 17.4% intensity, 1.74x depreciation (largest but most efficient)
• Meta: 33.0% intensity, 2.91x depreciation (smaller but most aggressive)

4. Testable & Replicable

Every metric is:

• Calculable from public SEC filings (no proprietary data)
• Quantifiable (specific thresholds, not subjective judgment)
• Trackable over time (quarterly monitoring)

You can run this exact framework on any company, any quarter, with consistent methodology.

5. Optimized for Quarterly Decision-Making

Investors make decisions quarterly (after earnings). This framework provides:

• 3 clear signals (not 20 confusing metrics)
• Specific thresholds (>2.5x depreciation = red flag)
• Actionable conclusions (rotate from GOOGL to MSFT)

You don't need to be a CPA or spend 40 hours analyzing. 5-10 minutes quarterly gives you institutional-grade insights.

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What to Do With This Analysis

Investment Actions Based on Current Q3 2025 Snapshot

Screen FOR: Efficient AI Investors

• Microsoft (MSFT): Transparent AI buildout, conservative accounting (1.89x depreciation)
• Amazon (AMZN): Largest scale, most conservative depreciation (1.74x), but watch growth alignment

Investment thesis: Get AI exposure without earnings quality risk. Suitable for quality-focused portfolios.

Screen AGAINST: Aggressive Capex + Accounting Red Flags

• Google (GOOGL): Highest depreciation manipulation signal (3.76x sustained)
• Meta (META): Extreme capex acceleration (33% intensity) + elevated depreciation ratio (2.91x)

Investment thesis: Reported earnings may be inflated 15-30% by depreciation suppression. Apply valuation discounts.

Portfolio Rotation Strategy

For investors seeking AI infrastructure exposure with quality focus:

Rotate FROM:

• Google (GOOGL): 3.76x depreciation ratio, earnings quality concerns
• Meta (META): 33% capex intensity, execution risk + accounting concerns

Rotate TO:

• Microsoft (MSFT): Conservative accounting (1.89x), measured capex increase (+8.1pp)
• Amazon (AMZN): Most conservative depreciation (1.74x), largest absolute scale ($120B)

This maintains AI exposure while upgrading accounting quality and reducing valuation risk from earnings manipulation.

Quarterly Monitoring Triggers

Bullish signals (increase conviction):

• Capex/depreciation ratio declining toward 1.5-2.0x → improving earnings quality
• Revenue growth accelerating to match/exceed capex growth → efficiency improving
• Capex/revenue intensity stabilizing after buildout → disciplined capital allocation

Bearish signals (reduce conviction):

• Capex/depreciation ratio rising above 3.0x → manipulation worsening
• Revenue growth decelerating while capex accelerates → capital destruction
• Capex/revenue intensity continuing to rise without product launches → speculative building

Subscribe to earnings notifications to know when to review these metrics each quarter.

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Next Update: February 2026

This analysis will be updated after Q4 2025 earnings (late January - early February 2026) with:

1. Fresh 8-quarter trends: Refreshed capex/revenue analysis with Q4 2025 data
2. Updated depreciation ratios: See if GOOGL/META improve or worsen
3. Full YoY growth data: Complete TTM comparisons with verified revenue/capex growth
4. Management guidance: 2026 capex plans from earnings calls
5. Trend change alerts: Which companies accelerated, stabilized, or decelerated

Subscribe for quarterly updates below to get notified when this guide refreshes.

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Try This Analysis Yourself

Manual Method (Free):

1. Go to SEC EDGAR
2. Download 10-Q filings for your target companies
3. Extract capex, revenue, depreciation from financial statements
4. Build Excel tracker with formulas above
5. Repeat quarterly

Time: 60-90 minutes per company, every quarter

MetricDuck Method ($19/month):

1. Sign up at metricduck.com
2. Use screener with pre-built filters:
   • capex / revenues with Q.TREND8 period type
   • capex / deprec_amort with Q.MED8 period type
3. Set up quarterly email alerts
4. View updated analysis automatically each quarter

Time: 5 minutes per quarter

Try free trial: metricduck.com/trial

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Historical Context: How We Got Here

2023 Q1-Q2: Early AI infrastructure buildout

• OpenAI ChatGPT launch (Nov 2022) triggers AI arms race
• Hyperscalers begin increasing GPU orders (Nvidia H100)
• Capex intensity begins rising from historical 10-15% baseline

2023 Q3-Q4: Acceleration phase

• Microsoft announces $80B+ annual capex guidance
• Meta pivots from metaverse to AI infrastructure
• Google and Amazon respond with competitive buildouts
• Investors initially support spending (AI enthusiasm high)

2024 Q1-Q2: Sustained increases

• All four companies increase capex/revenue ratios 5-10pp
• Depreciation ratios begin rising above 2.5x (GOOGL, META)
• Wall Street questions return on investment ("show us the revenue")

2024 Q3: Michael Burry thesis

• August 2024: Burry announces $176B depreciation understatement warning
• Highlights useful life extensions at Oracle, Meta, Google
• Market initially ignores (AI optimism dominant)

2024 Q4-2025 Q1: Peak spending

• Combined quarterly capex hits $60-70B (record levels)
• Depreciation ratios stay elevated (GOOGL sustains 3.5x+)
• Revenue growth begins slowing while capex accelerates

2025 Q2-Q3 (Current): Divergence emerges

• MSFT/AMZN maintain conservative accounting (1.7-1.9x depreciation)
• GOOGL/META show sustained elevated ratios (2.9-3.8x)
• Capex intensity peaks: META 33%, MSFT 23%, GOOGL 20%, AMZN 17%
• Market begins differentiating quality (valuation multiples compress for GOOGL/META)

Next phase (Q4 2025-2026): Will we see:

• Stabilization: Capex/revenue ratios plateau as buildouts complete?
• Acceleration: Further increases toward 35-40% (speculative excess)?
• Correction: Depreciation policies normalize as scrutiny increases?

Check back February 2026 for Q4 2025 update.

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Data sources: SEC EDGAR filings, BigQuery analysis of 10-Q/10-K financial statements. All metrics verified against original SEC filings. Analysis current as of Q3 2025 reporting period (ended September 30, 2025). Updated November 15, 2025.

Disclaimer: This guide is for educational purposes only and does not constitute investment advice. The author may hold positions in mentioned securities. Perform your own due diligence or consult a financial advisor before making investment decisions.