Not all companies will survive the AI arms race. Like with every new technology wave, there will be very few winners who emerge from a large group of competitors. From automobiles to the internet, we’ve seen this winnowing process play out many times, and it always ends the same way: a few winners and a lot of losers. The only difference over time is that the winners and losers emerge much faster.
So, for today’s investors, we recommend you start positioning yourself now to back the winners and fade the losers in the AI arms race.
Fortunately for you, we’ve done the diligence on the big 6 players in AI, and we think the numbers show a clear path for some companies to win and others to lose. As usual, it comes down to the money – some firms can afford to spend more than others.
Given the gargantuan amount of spending required to compete in the AI arms race, the bottom line is that certain companies are at a clear disadvantage. We think they will be the losers in the AI arms race.
On the other hand, the companies that can afford to spend the most money have a much better chance of winning.
Get all the details in our latest Danger Zone report.
Below is a free excerpt from the report, published today to Pro and Institutional members. You can buy the full report a la carte here.
We’re not sharing the names of the winners or losers because that’s for our Professional and Institutional members. However, we think you’ll greatly enjoy the research because it provides insights into how hard we work to give you the best ideas and warnings.
Feel free to share with friends and family, and we hope your portfolio stays safe from stocks like this one.
You need a Professional Membership or higher to view all the content on this page.
Already a member?
Learn more about our research here.
Who Are the Losers?
Trailing-twelve-months (TTM) free cash flow (FCF) is the simplest way to identify which businesses do or do not generate enough free cash flow to maintain massive AI expenditures and stay in the race. A review of TTM FCF reveals stark divides between the top AI spenders.
Per Figure 1, three of the companies each generated tens of billions of dollars in FCF over the TTM period.
This cash generation reinforces each company’s ability to fund future AI investment.
In contrast, the other three burned large amounts of cash over the same time and are the losers in this group.
Figure 1: TTM Free Cash Flow (FCF) of the Top Spenders in the AI Race
Sources: New Constructs, LLC and company filings
The divergence in free cash flow between the winners and losers has grown in recent years as well.
From calendar 2020 through 3Q25, each of the companies in Figure 1 generated the following in cumulative FCF:
- Company 1: $482 billion
- Company 2: $222 billion
- Company 3: $59 billion
- Company 4: $59 billion
- Company 5: ($94) billion
- Company 6: ($222) billion
Simply put, companies that generate strong cash flows possess a clear advantage in funding long-term AI initiatives over those already burning cash to support the normal (no AI) operations of their business.
Figure 2: Cumulative FCF: Calendar 2020 – Nine Months ended 3Q25
Sources: New Constructs, LLC and company filings
…there’s much more in the full report. You can buy the report a la carte here.
Or, become a Professional or Institutional member – they get all Danger Zone reports.
Interested in starting your membership to get access all our Danger Zone picks? Get more details here.