Today we want to keep pulling on a financial analysis thread we first noticed in our post last week about Q3 2024 earnings: that trends in spending on capital equipment may not be as rosy as they seem.

Specifically, we noticed that while growth in “capex” spending among 3,200 firms seems positive — up 17 percent compared to the year-ago period — that increase was actually driven by only 10 firms spending gobs more money on capital expenditures. Among all the other firms we examined, Q3 2024 capex spending actually fell compared to Q3 2023 levels.

So how true is that pattern, really? Which firms are pouring money into capex spending, and to what extent is that spending among the few distorting the picture for the whole? 

To unpack those issues, we first pulled together a peer group of 1,800 non-financial firms with at least $100 million in revenue. Then, using our Bulk Data Query page, we looked at their quarterly capex spending from the start of 2021 through Q2 2024, broken into three groups:

• The entire population of roughly 1,800 firms;

• The entire population minus five tech giants: Amazon, Apple, Facebook, Google, and Microsoft;

•  Those five tech giants alone.

The results are quite something. Quarterly capex spending for the whole group went from $248.4 billion at the start of 2021 to $299.8 billion by mid-2024, an increase of 20.7 percent. Among the five tech giants, however, capex spending went from $28.8 billion to $53.8 billion in that same period — an increase of 87 percent. 

The five big tech companies’ share of total capex spending also increased, from 11.6 percent of all capex spending at the start of 2021 to 17.9 percent by mid-2024. 

So Silicon Valley capex spending is booming. Presumably that’s to fund new data centers for cloud computing and AI, although remember that Amazon also has huge needs for warehouses, delivery vehicles, and other goods related to its e-commerce operations. Regardless, the big tech firms are pouring so much money into capex spending that they distort the capex picture for Corporate America as a whole. See Figure 1, below.

So yes, capex spending is increasing among a wide range of firms, which is good; but financial analysts need to pay attention to the details, since a small number of big spenders are distorting the true level of investment happening across most companies.

Individual Capex Changes

We also used our Multi-Company page to look at individual companies’ capex spending, comparing Q3 2023 and Q3 2024 levels. Figure 2, below, is the chart we ran in our previous post listing the 10 firms with the biggest increases in capex spending.

OK, we have a few of the big tech companies there, as suspected from the first half of this post. We were also intrigued to see oil companies in the mix, including Occidental Petroleum ($OXY), Devon Energy ($DVN), and Dominion Energy ($D). What are those guys doing?

To answer that, we cracked open the Disclosures & Footnotes Query page to see what we could find — and we found some good stuff!

For example, that $8.9 billion increase in capex spending at Occidental is largely due to the company acquiring Crownrock in August 2024 for $12.4 billion in cash, stock, and assumed debt. That deal added property, plant, and equipment assets worth $11.8 billion to Occidental’s balance sheet, and that’s where the jump in capex spending came from.

As an aside, in that same disclosure Occidental also said it expects oil to reach $97 per barrel over the next 15 years, and natural gas to go from $2.80 per 1,000 cubic feet to $5.10. There’s always good stuff in the footnotes if you look!

Our point is simply that sound financial analysis depends on a granular look at data; you can’t rely on a simple headline — “companies are spending more on capital equipment, so the economy is great” — to guide decisions specific to the companies you follow. You need to look at company-specific data, often tucked away in the footnotes. Calcbench has that data, and all the tools you need to bring it to the surface and find out what’s really going on.