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AI spending boom soars but no returns for big tech giants, warns Jefferies’ Chris Wood

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AI spending boom soars but no returns for big tech giants, warns Jefferies’ Chris Wood
The clearest signal that the AI capex arms race may be approaching a peak is not coming from headlines, but from balance sheets.

According to Jefferies’ Christopher Wood, global head of equity strategy, the scale of spending by US hyperscalers has reached a point where it is consuming an increasingly large share of their cash flows, particularly on chips and memory. Based on the latest company guidance, capex as a percentage of operating cash flow for the four major US hyperscalers has surged from 41% in 2023 to a projected 92% in 2026.

A significant portion of this is being directed towards memory alone, which is estimated to account for about 30% of total capex, implying roughly 28% of operating cash flow being absorbed by memory investments this year, he said in his Greed and Fear report.

This rising intensity of investment brings into focus a more fundamental question: monetisation. A recent Jefferies report led by Edison Lee highlights that the challenges around AI business models remain underestimated. The increasing cost of staying competitive, driven by higher compute, memory, and power requirements, suggests that sustainable profitability for pure AI model players remains distant.

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Wood aligns with this view. His base case is that AI may ultimately resemble a capital-intensive industry like airlines, rather than the high-margin, winner-takes-all dynamics seen in the internet era.


Even so, the current phase of spending shows little sign of slowing. Big Tech companies continue to push ahead with aggressive capex plans. Microsoft expects to spend $190 billion this year, including about $25 billion attributed to higher component costs. Alphabet and Meta have both raised their 2026 capex guidance to $180–190 billion and $125–145 billion, respectively, while Amazon has maintained its guidance at $200 billion.
Among these, investor concerns appear more pronounced in the case of Meta, which lacks the same direct cloud-driven benefits from AI spending as peers like Alphabet, Microsoft, and Amazon.For now, the “picks and shovels” trade remains intact, supported by continued spending and limited pushback from investors on returns.

However, early signs of strain are beginning to surface. A recent report noted that OpenAI has missed internal targets for both user growth and revenues, including a goal of reaching 1 billion weekly active users for ChatGPT by the end of last year. The company has also reportedly fallen short of multiple monthly revenue targets in 2026, while facing increased competition.

Market share trends reflect this shift. Over the past 12 months to March, Gemini’s share of web traffic in the generative AI market has risen sharply from 6% to 25.5%, while ChatGPT’s share has declined from 77.4% to 56.7%, according to SimilarWeb data.

At the same time, concerns have been raised about financing structures within the ecosystem, where partners such as Nvidia and Oracle provide funding to OpenAI, which in turn uses that capital to purchase compute from them.

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Competition is also intensifying. Anthropic reported in early April that its annualised revenue run rate has exceeded $30 billion, up from around $9 billion at the end of 2025, now surpassing OpenAI’s reported run rate of over $25 billion in February.

Taken together, the picture that emerges is one of escalating investment, rising competitive pressure, and unresolved questions around returns. The spending cycle continues, but the strain it places on cash flows and the uncertainty around monetisation are becoming increasingly difficult to ignore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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Kylie Jenner Sued by Second Housekeeper Alleging Abuse Discrimination in Explosive Lawsuit

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Meghan Markle and Prince Harry

LOS ANGELES — Reality star and beauty mogul Kylie Jenner is facing a second lawsuit from a former housekeeper who alleges racial discrimination, harassment and wage violations while working in the celebrity’s household. Juana Delgado Soto filed the complaint in Los Angeles County Superior Court, claiming she endured cruel treatment from supervisors and that Jenner ignored her handwritten plea for help. The suit, obtained by multiple outlets, marks the latest legal headache for the Kardashian-Jenner family member amid her high-profile career and personal life.

Kylie Jenner
Kylie Jenner

Soto worked for Jenner for approximately six years, according to court documents. She accuses staff supervisor Itzel Sibrian of mocking her accent, immigration status and national origin. The lawsuit names Jenner, Kylie Jenner Inc., Sibrian, Tri Star Services and La Maison Family Services as defendants. It alleges failure to prevent or remedy harassment, discrimination and unpaid wages, among other claims.

The filing comes just weeks after another former housekeeper sued Jenner over similar allegations of a hostile work environment. The back-to-back lawsuits have drawn renewed scrutiny to labor practices in celebrity households, where glamour often masks behind-the-scenes tensions.

Details of the Alleged Mistreatment

Soto claims the harassment intensified after she slipped Jenner a letter detailing the abuse she faced from other staff members. Instead of addressing the concerns, Soto alleges she was threatened with termination. The suit describes a toxic environment where supervisors allegedly belittled her and subjected her to discriminatory comments.

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Attorneys for Soto argue that Jenner, as the employer, bears responsibility for maintaining a safe workplace. The complaint seeks unspecified damages, including back pay and compensation for emotional distress. Representatives for Jenner have not publicly commented on the latest filing, consistent with the family’s typical approach to legal matters.

Legal experts note that such cases often hinge on evidence of notice and response. If Soto can demonstrate that Jenner or her company knew about the issues and failed to act, liability could extend upward. Celebrity employers frequently face similar claims, highlighting challenges in managing large domestic staffs.

Context Within Jenner’s Empire

Jenner, 28, built a billion-dollar cosmetics brand and maintains a lavish lifestyle documented across social media and reality television. Her household staff supports the operations of multiple properties and family needs, including care for her children. The lawsuits raise questions about oversight in such high-net-worth environments, where power imbalances can exacerbate workplace issues.

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The Kardashian-Jenner family has previously faced labor disputes, though most are resolved privately. Public interest in their personal lives amplifies any legal drama, turning employment complaints into tabloid fodder. Supporters of the family often dismiss claims as opportunistic, while critics point to patterns warranting accountability.

Soto’s attorney emphasized the plaintiff’s desire for justice and systemic change rather than publicity. The case could proceed to discovery, potentially revealing internal communications or policies regarding staff treatment.

Broader Implications for Celebrity Employers

High-profile individuals frequently employ domestic workers under varying degrees of formality. Lawsuits like Soto’s spotlight vulnerabilities in an industry with limited union protection and high turnover. California labor laws provide strong worker safeguards, including anti-discrimination protections and wage requirements, which plaintiffs invoke in these filings.

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Employment attorneys note an uptick in claims against wealthy households post-pandemic, as remote work blurred boundaries and awareness of rights grew. Cases involving celebrities often settle to avoid negative publicity, but repeated suits can damage reputations regardless of outcomes.

Jenner’s team has successfully defended against previous allegations, maintaining that claims are exaggerated or unfounded. The family’s legal resources allow aggressive defense, though public perception can shift with each headline.

Jenner’s Response and Brand Impact

As one of the world’s most followed celebrities, Jenner’s business interests — Kylie Cosmetics, skincare lines and endorsements — rely heavily on her image. Lawsuits alleging mistreatment pose reputational risks, particularly among younger consumers attuned to social justice issues. Brand partners monitor such developments closely.

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Jenner has not addressed the lawsuits directly on social media, focusing instead on product launches and family updates. Her representatives typically issue statements denying wrongdoing while expressing commitment to fair treatment. The strategy aims to contain damage while legal processes unfold.

Industry observers suggest the cases could prompt greater transparency in celebrity staffing practices. Some high-profile figures have adopted formal HR policies for domestic employees, including clear complaint mechanisms and third-party oversight.

Legal Trajectory and Potential Outcomes

The lawsuit is in early stages, with defendants expected to file responses denying allegations. Mediation or settlement talks often resolve such matters before trial, especially when publicity is a factor. If it proceeds, discovery could uncover emails, witness statements and employment records shedding light on household dynamics.

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California courts have seen similar cases against affluent employers, with mixed results. Plaintiffs must prove specific violations, while defendants highlight at-will employment and performance issues. Jury sympathy can vary depending on presented evidence.

For Soto, the suit represents accountability for alleged years of mistreatment. For Jenner, it adds to a growing list of legal distractions amid business expansion and personal milestones.

Public and Social Media Reaction

Social media erupted with commentary following reports of the second lawsuit. Supporters defended Jenner, citing her philanthropy and demanding evidence. Critics amplified the claims, calling for boycotts or greater scrutiny of wealth disparities. The story trended across platforms, blending celebrity gossip with labor rights discussions.

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The Kardashian-Jenner brand has weathered previous controversies through strategic PR and fan loyalty. Whether these lawsuits gain lasting traction depends on developments in court and public statements.

As details emerge, the case highlights complexities in employer-employee relationships within private homes. For now, Jenner continues her public-facing work while legal teams handle the claims behind the scenes.

The dual lawsuits underscore ongoing debates about power, accountability and fairness in an era where celebrity lives face unprecedented visibility. Resolution could take months or years, leaving both sides navigating legal and reputational challenges.

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Trump Transportation Sec. unleashes relief measures in wake of Spirit Airlines shutdown

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Trump Transportation Sec. unleashes relief measures in wake of Spirit Airlines shutdown

Transportation Secretary Sean Duffy announced a number of relief measures for Spirit Airlines customers and employees on Saturday.

The four major U.S. airlines — United, Delta, JetBlue and Southwest — “are all capping ticket prices specifically for Spirit customers who now need to rebook canceled flights,” Duffy said in a Saturday post on X. The airlines will offer Spirit customers who validate they have booked Spirit flights a one-way ticket costing around $200, Duffy said in a Saturday morning press conference. 

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“I would recommend that if you have a ticket with spirit that you actually try to book with these airlines as soon as possible, these offers are not going to be open forever,” he said.

Additional relief measures for both customers and former Spirit employees will also be implemented, including a pathway for preferential employment interviews at other airlines, Duffy wrote.

“There’s a demand for aviation workers. So, even American and United have drafted or crafted microsites for Spirit employees to potentially jump the line, jump the queue and get preferential treatment in the application process for the many airlines that are now hiring, whether it’s pilots, flight attendants, baggage workers, or even those who have worked in the call centers, you can go to the individual websites to see what’s offered by each of the individual airlines,” Duffy said. 

Spirit Airlines announced the shutdown of operations early Saturday morning, Duffy announced.

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“This morning at 3 a.m., Spirit Airlines ceased operations. So what that means is Spirit does not have airplanes in the air flying as of this morning. Also, their call centers are closed, and they don’t have staff at ticket counters. So if you have a flight scheduled with Spirit Airlines, don’t show up at the airport. There will be no one here to assist you,” Duffy said.

Duffy also bashed Democrats, particularly the Biden administration, for what he said was their role in quashing a failed Spirit-JetBlue merger. 

“Why are we here today?” Duffy asked. “There was a proposed merger between JetBlue and Spirit, and Joe Biden and [Biden Transportation Secretary] Pete Buttigieg, along with the Biden DOJ, decided that they did not want that merger to take place.” 

“And at the time, the Biden and Buttigieg DOJ bragged and said, as they canceled the option for this merger, that this was a victory for U.S. travelers who deserve lower prices and better choices,” Duffy continued.

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“This merger should have been allowed. And this, today would indicate this is not better for travelers. This is not better for pricing. This is not better for competition. Actually. It’s worse. We had an airline go down because the markets were trying to allow two airlines to merge, make them stronger and offer more competition for the American consumer,” he said. 

This is a developing story. Please check back for updates.

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Prolonged Hormuz closure raises risk of Eurozone recession

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Prolonged Hormuz closure raises risk of Eurozone recession

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Merck’s LOE Risks Mitigated – R&D And M&As Are Paying Off (NYSE:MRK)

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Merck's LOE Risks Mitigated - R&D And M&As Are Paying Off (NYSE:MRK)

This article was written by

I am a full-time analyst interested in a wide range of stocks. With my unique insights and knowledge, I hope to provide other investors with a contrasting view of my portfolio, given my particular background.If you have any questions, feel free to reach out to me via a direct message on Seeking Alpha or leave a comment on one of my articles.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

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Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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JEPI Has Been Dethroned And The Total Return Is Trailing It’s Peers (NYSEARCA:JEPI)

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Hercules Capital: 3 Reasons Why The Market Is Wrong (Rating Upgrade)

This article was written by

I am focused on growth and dividend income. My personal strategy revolves around setting myself up for an easy retirement by creating a portfolio which focuses on compounding dividend income and growth. Dividends are an intricate part of my strategy as I have structured my portfolio to have monthly dividend income which grows through dividend reinvestment and yearly increases. Feel free to reach out to me on Seeking Alpha

Analyst’s Disclosure: I/we have a beneficial long position in the shares of JEPI, GPIX, SPYI, XYLD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you.

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Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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China’s Commerce Ministry blocks US sanctions against five refineries

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China’s Commerce Ministry blocks US sanctions against five refineries


China’s Commerce Ministry blocks US sanctions against five refineries

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Rexford Industrial Realty: Unlock Stored Value

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Rexford Industrial Realty: Unlock Stored Value

Rexford Industrial Realty: Unlock Stored Value

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Trump expands US sanctions on Cuban government and affiliates

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Trump expands US sanctions on Cuban government and affiliates


Trump expands US sanctions on Cuban government and affiliates

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Berkshire Profits More Than Double on Gains in Insurance, Railroad, Energy Businesses

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Berkshire Profits More Than Double on Gains in Insurance, Railroad, Energy Businesses

Berkshire Hathaway’s BRK.B -0.12%decrease; red down pointing triangle quarterly profit more than doubled during the company’s first quarter under new CEO Greg Abel, paced by stronger results from its insurance and railroad operations. 

Berkshire’s pile of cash and Treasury bills rose to a record $381.1 billion after accounting for a payable for purchasing some of the short-term government debt, a nearly 2% increase from the $373.1 billion tallied at the end of 2025. 

Copyright ©2026 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Invest In The Top Part Of The K-Shaped Economy

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Invest In The Top Part Of The K-Shaped Economy

Invest In The Top Part Of The K-Shaped Economy

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