Artificial intelligence (AI) has been the driving force behind equity markets for some time now.
Each quarter we get rosy forecasts for future revenue potential and headlines that fuel the hype train.
But behind the headlines, lies the truth: AI is taking all the cash from the biggest names in the market. In fact, in just five quarters (2025 through 1Q26), five companies burned a combined $563 billion in free cash flow (FCF).
Armed with the latest data from 1Q26 filings, we update our AI Winners and Losers series to show how AI is killing the cash flows and crushing the balance sheets of the biggest AI companies.
Below, we provide an excerpt from our latest Danger Zone report. Get the full report a la carte here.
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AI’s Cash Incinerator
As first noted in Danger Zone: The Losers in the AI Arms Race, the AI race has turned cash printing machines into huge cash incinerators.
Figure 1 from the full report shows the latest quarterly free cash flow figures, and the picture is clearer than it was in November 2025 and February 2026. Only one company remains free cash flow positive.
All other AI giants burned billions in cash over the trailing-twelve-months (TTM).
Figure 1: TTM Free Cash Flow (FCF) of the Top Spenders in the AI Race
Sources: New Constructs, LLC and company filings
Figure 2 from the full report. illustrates the recent decline in FCF between the one company with positive FCF and the rest of the AI spenders. One tech giant is particularly noteworthy. From calendar 2015-2022, the company generated $174 billion cumulative FCF. From calendar 2023 through 1Q26, the company burned $111 billion in cumulative FCF.
Figure 2: Cumulative FCF of AI Spenders: 2015 – 1Q26
Sources: New Constructs, LLC and company filings
Diligence Drives Alpha
Long before we provided a deep dive on the peril of top AI spenders, we scoured the market for undervalued AI stocks that were poised to win big in the AI boom.
Through this work, we found two companies:
- Photronics (PLAB) – Photomasks & Microchips – October 19, 2023
- Arrow Electronics (ARW) – An AI/Semiconductor Stock that the Market Is Missing – July 10, 2024
Since our original reports, PLAB and ARW are up 180% and 60%, respectively, and have outperformed the S&P 500 by 105% and 27%, respectively.
Meanwhile, since we first warned about Oracle and its weak standing in the AI race on November 10, 2025, the stock is down 17%.
Since that warning, PLAB is up 144%, ARW is up 77%, and the S&P 500 is up 8%.
Figure 6 shows the performance of PLAB, ARW, and ORCL since we published our reports on each.
Figure 6: Performance of AI Picks: Through May 8, 2026
Sources: New Constructs, LLC and company filings
…there’s much more in the full report. You can buy the report a la carte here.
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